TRUE/FALSE
There are various main objectives in the macroeconomics policy, each of which contributes to an explanation and understanding of macroeconomics. Briefly define the following macroeconomic objectives and explain in your own words how each can be applied to improve the economy:
Out of 25
The price elasticity of demand for urban transitfares has been estimated to lie between
-0.1 and -0.6. Based on these results, what isthe economic argument forraising transit
fares? What political arguments might local governments and transit authorities
encounterin opposition to these economic arguments?
The price elasticity for rice is estimated to be -0.4 and the income elasticity is 0.8. At a price of $0.40 per pound and a per capita income of $20,000, the demand for rice is 50 milllion tons per year
a) is rice an inferior good, a necessity or a luxury? explain.
b) if per capita income increases to $20,500, what will be the quantity demanded of rice?
•Given the following set of simultaneous equations for two related goods,xandy, find the equilibrium conditions for each market if the consumers’ income isi=600. What types of goods arexandy?
•Q_dx= 22-3P_x+P_y+ 0.1i
• Q_sx=-5+15P_x
•
•Q_dy=32+2P_x-4P_y+0.1i
•Q_sy=-6+32P_y
A. Given the demand function 𝑄𝑑 = 15 − 0.2𝑃, find quantity demanded when price is GH¢ 2.00, GH¢ 5.00, GH¢ 7.00, and GH¢ 10.00. Present your results in a table.
B. Demand function for good X is given as Qdx = 6 – 0.2Px + 0.28Pz – 0.45Py
where Qdx is quantity demanded for good X, Px is price of good X, Py and Pz are
prices of related goods. Y is good Y and Z is good Z.
i. What type of good is Y? Explain your answer. ii. What type of good is Z? Explain your answer.
QUESTION THREE
With the aid of diagrams, explain the difference between increase in demand and increase in quantity demanded.
A firm is faced with undertaking one of these four projects in 2022 – open new branch, introduce another product, purchase a brand new vehicle, or increase workers’ salary. The costs and expected benefits of the projects are presented in the table below.
Activity
Branch Product Vehicle Salary
Direct cost Benefit (GH¢) (GH¢) 380 390 400 400 350 392 422 425
Use the information provided in the table to answer the following questions.
a) Compute the net benefit of each project using the direct cost.
b) Find the opportunity cost of each project.
c) Compute the net benefit of the projects using the opportunity cost.
Assume that a consumer consumes two commodities x and y and makes give combination for the two commodities? Explain its In your own words
Given the Demand function Q1 = 100-P1+0.75P2-0.25P3+0.005Y Calculate the price, income and
cross-price elasticity of demand and interpret the result respectively at P1=8, P2=15, P3=30 and
also Y=8,000 �