Other Economics Answers

Production Possibilities Curve

Use the picture link below to answer the question about Alpha economy

1. If all the resources are devoted to production of food, Alpha can produce how many pounds of food?

Link:

https://drive.google.com/file/d/1xZEutnD6kfOzdBmo7xqMYBrCQvN044eY/view?usp=drivesdk

Explain if the interest elasticity of investment demand is zero. What will be the resulting slop of IS schedule?

Which one of the following statements is INCORRECT?

1. The movement along IS1 from point a1 to a2 indicates the short-run to the medium-run 

adjustment process. 

2. In the medium-run, the central bank will react by decreasing the policy rate.

3. In the medium-run, the LM curve will shift downwards.

4. Point a1 is the medium-run equilibrium position.

5. When comparing point a2 with point a the demand for goods is the same since an 

increase in investment offsets the decrease in consumption

Fred invested R120 000 of his own capital in the enterprise and could, therefore, be described as someone who _______. 1) manages his own enterprise 2) has insight into the market 3) identifies new opportunities 4) is willing to take calculated risks

2. Explain the concept of opportunity cost using the example of a factory upstream, producing wood 

products and spilling some residuals into the water.

3. The trade-off between efficiency and equity remains unresolved. Should efficiency be sacrificed 

for equity? Motivate your answer

1. It has come to the attention of the Department of Environmental Affairs that "Air pollution kills 20 

000 people in South Africa every year, costing the economy nearly R300 million according to new 

research from the World Bank". As a solution the Minister of Environmental Affairs has proposed 

stringent pollution controls on the flow of residuals. Discuss the implication of the statement 

above on the flow of residuals in the economy and on the law of thermodynamics. 

Explain the implication that would be on quantity produced if the same environmental regulations were made effective on two firms, one with an inelastic demand curve and the other with an elastic demand curve.

Bwalya currently has a portfolio of shares giving a return of 21% with a risk of 13%. He is considering a new investment which gives a return of 22% with a risk of 14%. The coefficient of correlation of the new investment with his existing portfolio is +0.2. The new investment will comprise 45% of his enlarged portfolio.

Calculate the portfolio risk and expected return if Bwalya goes ahead with the new investment?

Why it that shares in some companies is are viewed as inherently riskier than shares in other companies?

Discuss the possible financial risk that a commercial bank such as absa may be exposed