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Rahman is considering to independent projects, Project A and Project B. The
initial cash outlay associated with Project A is RM50,000 and the project
would generate cash flows of RM12,000 per year for six years. While the
initial outlay for Project B would be RM70,000 with generate cash flows of
RM13,000 per year for ten years. The discount rate on both projects is 12
percent. Calculate Internal Rate of Return (IRR) for each project and indicate
if the project should be accepted or not
The national poultry producers published the following estimates of demand and supply relationships for plucked chicken:
QD = 60.000 – 10.000P
QS = 20.000P
a) Calculate the perfect competition equilibrium price and quantity that will result in the market for plucked chicken (6marks)
b) If the poultry industry was organized as a cartel, calculate the price and quantity that would maximize profits for cartel members.
(Hint: The Total Revenue function for the cartel would be: TR= 6Q – 0.0001Q2, and the Supply function could also be expressed as follows: P= 0.00005Q) (4.5marks)
c) Comparing your answers in parts a) and b), what is the effect on price and output in this market when the cartel is allowed to operate? What is the effect on consumer surplus (do not calculate, only describe/explain)? (4.5 marks)
The national poultry producers published the following estimates of demand and supply relationships for plucked chicken:
QD = 60.000 – 10.000P
QS = 20.000P
a) Calculate the perfect competition equilibrium price and quantity that will result in the market for plucked chicken (6marks)
b) If the poultry industry was organized as a cartel, calculate the price and quantity that would maximize profits for cartel members.
(Hint: The Total Revenue function for the cartel would be: TR= 6Q – 0.0001Q2, and the Supply function could also be expressed as follows: P= 0.00005Q) (4.5marks)
c) Comparing your answers in parts a) and b), what is the effect on price and output in this market when the cartel is allowed to operate? What is the effect on consumer surplus (do not calculate, only describe/explain)? (4.5 marks)
Which of the following statements are correct?
a. The difference between government spending and borrowing is called the budget deficit.
b. If government finances part of its spending from borrowing from the central bank, this is called inflationary financing.
c. Expansionary fiscal policy implies that taxes must increase, and government spending must be limited.
Suppose a Monopolist faces the following Total Cost and Demand functions:
TC = 100 +2Q
P = 25 - 0.25 What is the firm’s profit-maximizing position?
Which of the following statement(s) is/are correct?
a) In South Africa, money is created exclusively by the South African Reserve Bank.
b) The stock of money consists largely of bank deposits and banks create these deposits by making loans.
c) Money creation by banks is constrained by the demand for bank loans.
d) The South African Reserve Bank uses changes in interest rates as an attempt to regulate the rate at which new money is created.
e) The stock (quantity) of money in the economy is essentially determined by the interaction of the interest rate and the independent supply of money
4. Suppose the nominal gross national product of Ethiopia in 2010 and 2011 together with the GNP deflator are specified as follows:
Year Nominal GNP (in dollar) GNP deflator (price index)
2010 8,000,000,000,000 100
2011 10,000,000,000,000 200
Direction: Based on information provided above, answer questions that follow:
A. Compute the Real GNP of Ethiopia both for the years 2010 and 2011.
B. Determine the percentage (%) increase in Nominal GNP in 2011.
C. Determine the percentage (%) increase in Real GNP in 2011.
D. In which year there is higher inflation based on the above information? Why?
Woodworking Inc. is a private company. The custom build furniture. On June 1, 2021 Jill Wong signs a contract for Woodworking Inc. to build her a custom dining room set. She has to pay 15% on signed of the contract and will pay the balance on deliver on August 1, 2021. The selling price was $10,000 and the cost to build the furniture was $2,800.
You own a printing firm. Two of your senior managers provide you with advice. The first manager states that your company is losing money for every unit that is printed. To minimize losses, she advises that you reduce your production levels. The second manager states that if your firm sells some more units, the price will cover your increase in costs. In order to reduce losses, the second manager recommends that you should increase production. Explain which manager is correct and who is offering the correct advice?
You are a manager of an advertising company. The company is running short of funds, so you decide to increase revenue. Should you increase or decrease the price of running ads? Explain.
