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RM3, 500 per month. If Goh decides to operate, the cost of hiring fitness trainers is
RM6, 000 for the month. If Goh wants to shut down, he still has to pay the rent,
but does not have to hire labour. Now, consider THREE (3) possible scenarios.
In the first scenario:
Fitness Center does not have any members, and therefore does not make any
revenues, in which case it faces losses of RM3, 500 equal to the fixed costs.
In the second scenario:
Fitness Center has members that earn the center revenues of RM6, 000 for the
month, but eventually experiences losses of RM6, 000 due to hire fitness trainers to
cover the classes.
In the third scenario:
Fitness Center earns revenues of RM9, 000 for the month, but experiences losses of
RM500.
Based on the given scenarios, is that Goh should shut down his Fitness Center
immediately or later or continue?
Consider the relationship between a principal and its agents, agents are divided into highly productive H type and low productive L type. When an agent performs work for x hours, he/she gets a reward w for it. However, the agents have no place to work other than this principal. H type agents produces 8√x results from x hours of work, while L type agents produces 4√x results. Corporate profit is the result of the agents’ result minus the remuneration w, and the utility of the agent is defined by u = w - x.
Problem;
The principal does not know the type of agents but knows that the ratio of H type is 1/3 and the ratio of L type is 2/3, find the combinations or contracts (x, w) that enable the screening of agents but at the same time, maximises the profit of the principal.
Select one:
a. The monopolist cannot determine the price and quantity independently.
b. The monopolist is a price taker.
c. The monopolist can determine both price and quantity independently.
d. A monopoly firm in long run equilibrium always operate at the lowest point on long run average cost curve.
If the equation of demand curve is Q = 8 – 2P, then at price P = 2 the demand is
a. What is a cost of going to training institute which is not an opportunity cost?
b. What is an explicit opportunity cost of joining the institute?
c. What is an implicit opportunity cost of joining the institute?
a. What is a cost of going to training institute which is not an opportunity cost?
b. What is an explicit opportunity cost of joining the institute?
c. What is an implicit opportunity cost of joining the institute?
Does Increase in tax on gasoline increase government revenue? Can you be sure that the deadweight loss from gasoline tax will rise? Explain.
“Poverty/Inequality-reduction programs are bad for growth and redistribution curtails incentive for saving and work.” Can this statement be right? How?
e). Analyse how an employer could attract more workers.
