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Assume a return of 7% per annum on her retirement funds and if her planning is for 25 years after retirement, Calculate:
a. How much lumpsum she should deposit in her account today so that she has enough funds for retirement?
b. How much she should deposit each year so that she has enough funds for retirement?
Question 2
You are told that the price elasticity of demand for biltong is estimated to be 1.89.
Use this information to answer the questions that follow.
Marks will be awarded for your ability to integrate theory with the scenario provided.
Q.2.1 Identify any six factors that can impact the price elasticity of demand for
biltong; and
Explain how each one can be applied to achieve this elasticity coefficient.
(12)
Q.2.2 Based on an elasticity coefficient of 1,89, explain how biltong producers can increase total revenue from the sale of biltong.
(4)
Q.2.3 Fitness enthusiasts consider biltong to be an excellent source of protein and a good alternative to drinking a protein shake.
Based on this information, would you expect the cross elasticity of demand for biltong to be positive or negative if the price of protein shakes increases? Explain your answer.
a. Assuming you could not get the EXO ticket for free what is your opportunity cost of your seeing Miss A? Explain your answer.
b. Now assume you could get the EXO ticket for free, what is your opportunity cost of your seeing MissA? Explain your answer.
c. Suppose your third best alternative is to watch a EXO DVD at home, to which you place a monetary value of $10, and the DVD rental is $5. How will this affect your answers above?
Y = C + I0 + G0 + X0 – Z
Where C = C0 + bYd
Yd = Y – T
T = T0 + Ty and Z = Z0 + ZYd
In this equation X and Z are export and import
• Identify endogenous and exogenous variables and parameters.
• Find out equilibrium level of Y and C
