Economics Answers

An automobile manufacturer estimates that total variable costs will be $500 million and total fixed costs will be $1 billion in the next year. In setting price it is assumed that sales will be 80 percent of the firm’s 125,000 vehicle per year capacity, or 100,000 units. The target rate of return is 10 percent, which is to be earned on an investment of $2 billion. If prices are set on a cost-plus basis, what prices should be charged for each automobile?

Given the production function
Q = A Kα Lβ Nγ
where Q is the rate of output and K, L, and N represent inputs of capital, labor and land, respectively, determine:
(a)The specific conditions under which returns to scale would be increasing, constant, and decreasing.
(b)The equation for the marginal product function for each input

Sinalo Bhacela has R200 per week available to spend on beer and cigarettes. Beer costs R10 per bottle and cigarettes cost R40 per packet. Suppose John buys 8 bottles of beer and 3 packets of cigarettes and that his marginal utility from beer is then 20 utils and that from cigarettes 35 utils. Is he in equilibrium? If not, should he buy more beer or more cigarettes? Explain.

Now suppose that GDP increases as U.S. manufacturers produce more output. What impact will this have on the independent trucking industry in the short run, in terms of the market price, output of an individual firm, and market equilibrium quantity? Explain your reasoning. What impact will the increase in manufacturing output have in the long run?

Team Justice economy has exports of K6000 and marginal propensity to import of 0.2. Its
autonomous imports are K5000 while the tax rate is 20% of income. Investment spending is
K1500, autonomous savings is negative (–) K2500 and the marginal propensity to save is 0.5.
a. Write down:
i. The import function for the economy
ii. The consumption function for the economy
b. What is the value of total autonomous expenditure?
c. What is the value of the multiplier for this economy?
i) When closed without government .
ii) When closed with government
iii) When the economy is open
d. What is the value of induced consumption expenditure at the equilibrium level of
income?
e. What is the value of the budget deficit or surplus at the equilibrium level of income?
f. What is the value of Net exports or trade balance at the equilibrium level of income?
g. Given that full employment is reached at a level of 14, 300, by how much should we
change investment so as to achieve full employment income?

Explain the factors that influence imports of a country?

As consumer reduce their spending inventories are rising. Thr commerce department reported that sales of durable goods fell 0.6 percent , while sales of durable goods decresed 1.5 percent in August.Inventories of durable goods increased 1.4 percent . which components of GDP changes when sales of non durable goods fell

Question 4
In high school Jeff often made money in the summer by mowing lawns in the neighborhood. He just finished his freshman year of college and, after taking a Business 101 class, he has some ideas about how to scale up his lawn mowing operation. Previously, he had used his father's push mower, but he is thinking about getting a riding mower that will save time and allow him to do more lawns. He found a used, zero turn, riding mower on Craigslist for $1,000. He will also need a trailer to pull the mower behind his pickup; that will cost him an additional $600. With the new mower he can take on an additional 20 lawns per week at an average cash inflow of $22 per lawn he will receive at the end of each week. He has 12 weeks of summer in which to mow lawns. (For convenience, assume that the mower and trailer will have no value after Jeff is done with his work this summer.) The discount rate for Jeff is 11% (note that this is an annual rate). What is the Net Present Value of the mower/trailer project?