Economics Answers

Suppose China exports TVs and uses the yuan as its currency, whereas Russia exports vodka and uses the ruble. China has a stable money supply and slow, steady technological progress in TV production, while Russia has very rapid growth in the money supply and no technological progress in vodka production. On the basis of this information, what would you predict for the real exchange rate (measured as bottles of vodka per TV) and the nominal exchange rate (measured as rubles per yuan)? Explain your reasoning. (Hint : For the real exchange rate, think about the link between scarcity and relative prices.)

What is economic problem

Consider a profit maximizing firm whose total cost function is given as TC=Q2 +

20Q, consumers of the firm’s products derive benefits from the good according to the

function MB=500 – 12Q. Production of the product has negative effects on the

environment approximated at Ksh. 300 per unit.

(i) Determine the efficient level of output for the firm without government intervention

13. According to a study, the price elasticity of shoes in the United States is 0.7, and the income

elasticity is 0.9.

a. Would you suggest that the Brown Shoe Company cut its prices to increase its revenue?

b. What would be expected to happen to the total quantity of shoes sold in the United

States if incomes rise by 10 percent?

11. Why do you think that whenever governments (federal and state) want to increase rev-

enues, they usually propose an increase in taxes on cigarettes and alcohol?

12. Could a straight-line demand curve ever have the same elasticity on all its points?

If the equation for a market demand curve is Qd = 15 – 0,2P and the equation for a market supply curve is Qs = ̶ 1 + 0,6P, the market equilibrium price and quantity are? 

If the equation for a market demand curve is Qd = 15 – 0,2P and the equation for a market supply curve is Qs = ̶ 1 + 0,6P, the market equilibrium price and quantity are? 

In a closed economy

Y= c+i+g

C= 900+0.5(y-t)

I= 700-30r

T= 800

G= 1200

Md=Ms

Ms=1500

Mt=0.7y

Msp= -80r

Derive the IS and LM equations of the economy.( Express y as a function of r and assume p is fixed at 1.0)

Calculate the short run equilibrium values of y and r in the economy.

You need a P40,000 per year for 4 years to go to college. Your father invested P50,000 in a 7% account for your education when you were born. If you withdraw the P40,000 at the end of your 17th, 18th, 19th, and 20th years, how much money will be left in the account at the end of your 21st year?