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how does the government use concepts of elasticity while deciding which goods to tax and how those decisions impact the government revenue
Demand is described by the equation: Qd = 200-5P, and supply: Qs = 35P-200. The government introduced a per-product tax on the producer in the amount of t per unit of goods. As a result, the equilibrium quantity (q) decreased by 17,5%. Find the amount of tax (t)
Let the PPFs of the factories look like this:
1 plant: y = 40-x
2 plant: y = 100 - 4x
3 plant: y = 60 -2x
Find the maximum number of x if you want it to be exactly the same as y.
Let assume, Ann and Bob plan a common activity during lock down. Their alternatives:
- А - watch a movie;
- B - read a book;
- C - attend a lecture online;
- D - create a TikTok video;
- E - cook a special dish.
Ann’s preferences are designed in such way that utility from alternative A is 22, B - 16, C - 18, D - 25, E - 30.
Bob’s preferences are designed in such way that utility from alternative A is 21, B - 16, C - 4, D - 3, E - 7.
Choose all Pareto-efficient alternatives.
Question 2
a. Mention any 5 concepts used interchangeably with:
i. Lending rate. (5)
ii. Strict monetary policy (5)
iii. Accommodative monetary policy (5)
b. Mention the types of inequality that were seen most during the period of hard lockdown in South Africa.
a. Discuss South Africa as:
i. An upper middle income economy.
ii. A commodity-based economy.
iii. Small open economy.
iv. Dualistic economy. vs. safe-haven economy.
a.Clearly explain any 3 characteristics of a developing economy. (9)
b. Mention any five challenges to the South African economic growth. (5)
c. Which challenge is at the top list of South Africa’s priorities and why? (3)
d. Mention the three main rating agencies. (3)
Consider two digital startups S and T. Following information about fixed and marginal cost in the short run is available: • Fixed cost FCS = 5000; constant marginal cost MCS = 40, • Fixed cost FCT = 100; marginal cost MCT = 10Q, where Q is the quantity of output produced.
a) State both startup’s total cost function !
b) What are the average cost AC(Q) of the two firms ?
c) Suppose government imposes a digital tax of 0.5 per unit of output. How does this tax affectmarginal, averageandtotalcost? Ifgovernmentchargedalump(fixed)sum,which cost would be affected ?
d) Suppose the startups are successful and stay in the market. Would you expect long run average cost to smaller or larger than average cost in the short run ? Briefly explain.
e) Can you say something about long run marginal cost, if you know that long run average cost is constant ? Does this imply anything with regard to returns to scale ? Briefly explain.
Consider an investment fund that builds its portfolios with help of humans H and robots R. The human employees receive a wage w = 40 per hour. The rental rate of robots r = 60 per hour. Suppose that inputs H and R are perfect substitutes and a portfolio can be created by 2 humans only, one robot only or any combination in between (assuming for computational reasons that humans and robots can contribute part-time also).
a) Draw isoquants for F(H,R) = {10,20,30}, i.e. production levels of 10, 20 and 30.
b) To produce 20 portfolios, the company chooses to employ 10 humans and 15 robots. Does this input combination minimise cost and, therefore, optimise production ? Add the corresponding isocost line to your graph of isoquants !
c) Whichinputcombinationwilloptimiseproduction
A firm producing hockey sticks has a production function given by
q=2√kl
The price of labor is “w”, the price of capital is “v”. For any given level of output “q”:
1. Calculate the firm’s long-run total, average and marginal cost function.
2. Please show the cost function is homogeneous of degree 1 in input prices.
