Other Economics Answers

1.    The following are the marginal cost and marginal value equations:

MarginalValue(DemandCurve)= P = 195-6Q

MarginalValue(SupplyCurve)=P=45=4Q

a.    Using these curves, estimate the equilibrium price and quantity assuming a perfectly competitive market. (4 points)

b.    Estimate the equilibrium price and quantity assuming these curves represent what a profit maximizing monopolist faces. (4 points)

c.    Estimate the equilibrium price and quantity assuming these curves represent a profit maximizing monopsonist. (4 points)

Q.1(a) Suppose investors prefer one-year bonds to two-year bonds and will

purchase a two-year bond only if they expect to receive an additional 2% over

the returns from holding one-year bonds. Currently, one-year bonds yield 6%,

but investors expect the yield to fall to 2% next year. (6)

(i) Which of the three models of term structure is relevant in this case?

(ii) What is the yield on a two-year bond?

(iii) Is the yield curve flat, downward sloping or upward sloping? Explain.

A weekly income of a clerk was Increased from $100 to $125 as a result of promotion in the office. He is to purchase 300 loaves of bread instead of 200 per week. Calculate the coefficient of his income elasticity of demand.

The worldwide consumption of cigarettes increased from 2.5 trillion in 1960 to 4 trillion in 1980.Let y be the consumption of cigarettes (in trillion) x years after 1940. In what year will the consumption reach 5.5 trillion. (Assume that the data can be approximated fairly closely by a straight line. Use the given information to find the equation of the line)

Consider a time series of some economic variable (at least of 20 years) and estimate the trend using the following methods: Graphic Method Method of Semi Averages Method of Least Squares Method of Moving Averages (determine the period of MA also; if not possible take m = 4 ) Interpret your result for each of the method. Also plot the trend values obtained from Method of Least Squares and Method of Moving Averages against the original data and compare the results from the two methods. Also find the trend eliminated values of the variable.

ANSWER THE FOLLOWING QUESTIONS

1. What is the main product category or sector which is the most important one in recent years, as compared to 70 years back? Explain!

2. With the use of mathematical equation, explain gravity model.

3. What is the relationship of the following variables with trade? Explain!

a. distance

b. income

4. Identify and explain 5 determinants of trade, that you know.

5. Is there any empirical evidence to support the prediction of gravity model? Explain

Directions: Analyze the following questions and provide your answer.

1. How is tax the lifeblood of the government?

2. Should there be a uniform minimum wage in the whole country of the Philippines? Why or why not?

Topic: Minimum Wage and Taxes

Directions: Make a generalization on how minimum wage and taxes can be applied on the very essence of learning Applied Economics. answer using 3-5 sentences only.

A company leases a building for $100,000 per year for it manufacturing. In addition, the

machinery in the building is being paid for O&M cost $20,000 per year. Each unit of the product

produced costs $15 in labor and $10 in materials. The product can be sold for $40 per unit.

Determine

a)

How many units per year must be sold for the company to breakeven.

b)

The annual profit If 10,000 units per year are sold.

If international price decreases, and you are consumers, which policy would you prefer to, unchanged tariffs or unchanged import quotas?