Economics Answers

Where would an REA diagram for the production cycle depict the list of ingredients for making a product?

A. In the bill of materials table

B. In the raw materials table

C. In the work in process table

D. In the finished goods table

Find the IRR of the following investments and determine which should be accepted, given a

required rate of return of 10%:

Investment A: An investment costing $31,140 promising a cash flow of $3,000 per year for 15

years.

Investment B: An investment costing $46,000 promising a cash flow of $6,000 per year for 20

years.

What impact did an increase in prices of petrol, dissel have in the South African economy as a whole...which sectors affected the most as due to the War in between Russia and Ukrain

Draw the Philips Curve in 1980 with the economy facing stagflation, Label this point "A''

Show the short-run results of Chairman Volcker's leadership on the Philips curve, Label this point of short-run equilibrium point "B" and indicate new inflation and unemployment rate .

1.    A homogeneous products duopoly (from firm 1 and firm 2) faces an inverse market demand function given by P = 300 - 3Q, where Q = q₁ +q₂. The cost functions for Firm 1 and Firm 2 are given as C1(q1) =100q1 and C2(q2) = 100q2.

a)    If the firms compete under Cournot assumptions; 

                i.         What is Firm 1’s profit-maximizing quantity, given that Firm 2 produces q₂ output per year?

              ii.         What is Firm 2’s profit-maximizing quantity, given that Firm 1 produces q₁ output per year?

            iii.         Sketch the equation of each firm’s reaction curve (Firm 1 and Firm 2)

             iv.         Find the Cournot equilibrium quantity per firm and price in this market.

b)    If the firms collude and agree to share total profits equally in the industry, what will be the price?

c)    Now suppose that firm 1 is a Stackelberg leader while firm 2 is a follower. Calculate the price in the industry and output of the leader.

1.    The opening statement on the Web site of the Organization of Petroleum Exporting Countries (OPEC) says, “... OPEC’s eleven members are all developing countries whose economies are heavily reliant on oil export revenues. They therefore seek stable oil prices that are fair and reasonable for both producers and consumers of oil.” To achieve this goal, OPEC attempts to coordinate and unify petroleum policies by raising or lowering their collective oil production. However, increased production by Russia, Oman, Mexico, Norway, and other non-OPEC countries has caused the price of crude oil to fall dramatically in recent years. To achieve its goal of stable and fair oil prices, what must OPEC do to maintain the price of oil at its desired level? Do you think this will be easy for OPEC to do? Explain.

You are the human resources manager for a famous retailer, and you are trying

to convince the president of the company to change the structure of employee

compensation. Currently, the company’s retail sales staff is paid a flat hourly

wage of $18 per hour for each eight-hour shift worked. You propose a new

pay structure whereby each salesperson in a store would be compensated $8

per hour, plus five-tenths of 1 percent of that store’s daily profits. Assume

that, when run efficiently, each store’s maximum daily profits are $40,000.

Outline the arguments that support your proposed plan.

Compare and contrast the permanent income hypothesis and the relative income hypothesis in explaining consumption behavior in a modern developing country such as Kenya. (8marks)

b) Explain why a little inflation is always necessary so as to grease the wheels of the

economy (4marks)

c) Discuss the key assumptions of the Mundell - Fleming model ( 5marks)

d) Explain five indicators of a developing country (5 marks)

e) Demonstrate your understanding of the concepts of inflationary gap and deflationary

gap and show how they can be corrected (6 marks)

The commodity and money markets of Juja farm, a hypothetical economy are as

given below:

Commodity Market

Y = C + I

C = 1000 + 0.8Y

I = 2000 – 0.75r

Money Market

Lt = 0.25Y (Transactions and precautionary demand for money function)

Ls = 1000 – 0.5r (Speculative demand for money function)

Ms = 3200 (Money supply function)

Required:

i) Mathematically derive both IS and LM curves. (6 marks)

ii) Derive the equilibrium level of Income and rate of interest.

(4 marks)

iii) If the money supply is increased by 80, what would be the effect on the equilibrium level of income and rate of interest in Juja farm economy?