Other Economics Answers

1. Are these statements true, false, or uncertain? Justify.

1. The stochastic error term u_i and the residual term e_i mean the same thing.
2. The Population Regression Function (PRF) gives the value of the dependent variable corresponding to each value of the independent variable.
3. A linear regression model means a model linear in the variables.
4. In the linear regression model, the explanatory variable is the cause and the dependent variable is the effect.
5. The conditional and the unconditional mean of the random variable are the same thing.
6. The regression coefficients, the bs, are random variables, whereas the s are the parameters.
7. The slope coefficient in a simple regression model measures the slope of Y per unit change in X.
8. In practice, the two-variable regression model is useless because the behavior of a dependent variable can never be explained by a single explanatory variable.
9. The sum of the deviation of a random variable from its mean value is always zero.

Analyse, using a supply diagram, the effect of an improvement in the quality of the

training car workers receive on the supply of cars. (6)

1.    Profit Maximization for Corn-Soybean Farm 

Ganesh began a mask manufacturing unit in Chennai ten years ago. He sells surgical masks to several medical institutions in South India. Though the business is doing well Ganesh started to feel that he should expand the business by attracting more customers. Ganesh has an opportunity to sell the masks to Sri Lanka and Mauritius. He has also been contacted by a party in Gurgaon for sales. Based on his production capacity Ganesh can either take up the North India market.

a. What factors are to be considered by Ganesh to decide if he wants to go for exports in Sri Lanka and Mauritius?

b. If Ganesh decides to go for Exports what procedure and documents are required?

Purchase price of equipment 400000

Cost of transport and installation of equipment 70000

Fine paid for illegal transport of equipment 10000

Using the information for Ngidi’s Clothing Manufacturers supplied in 1.1.2 above,

determine which one of the following amounts represents the total capitalised cost of

the asset, equipment. (2)

A) R400 000

B) R470 000

C) R480 000

D) R460 000

Purchase price of property 840000

Legal and transfer fees 21000

Cost of demolishing old building 30000

Proceeds from sale of old building material 9000

Architect’s and engineers’ fees 16000

Cost of construction of new building 502000

Determine which one of the following amounts represents the total capitalised cost of

the asset, property.

A) R1 400 000

B) R1 363 000

C) R1 418 000

D) R1 379 000

Answer the following:

1. What are the advantages and disadvantages of perfect competition in the market?

2. Is perfect competition realistic? Justify your answer.

3. What do you think is the importance of the market structure?

a)  Describe and briefly explain the importance of the concept of elasticity.

Government can finance its spending by

Nthabiseng’s monthly disposable income increases from R3 000 to R3 400. As a result, her monthly savings increase from R400 to R560. This implies that her marginal propensity to consume is …