Economics Answers

What is budget line

At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm’s marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm’s current profit? What is likely to occur in this market and why?

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Given the following:
C = 2000 + 0.75Yd
T = 300
I = 320
G = 300
X = 300
M=100


a) Determine the equilibrium level of income using expenditure and injection-leakage approach

b) Determine the value of C at equilibrium level of income.

c) Calculate the equilibrium level of income when there is an increase in investment of 100 using expenditure and multiplier approach.

Given information for Country X as below:

Details
$ (million)
Consumers consumption =30
Net Investment=20
Government Expenditure=30
Export=20
Import=10
Depreciation=10
Indirect taxes=25
Subsidies=118


1)Calculate Gross Domestic Product (GDP) market price for Country X

2)Calculate Gross Domestic Product (GDP) factor cost for Country X

3)You opened a saving account for your son 4 years ago and deposited $500 at that time. Three years ago, you added another $500 to the account. Last year, you deposited an additional $300 into this account. With an interest rate of 5% compounded annually, how much is in the account today?

4)Mike borrowed $150,000 from ABC Bank for 5 years at an interest rate of 12% compounded monthly. How much is his monthly loan payment?

1)Cash inflows expected from a project are $28,000 for year 1, $22,000 for year 2, $20,000 for year 3, $25,000 for year 4 and $20,000 for year 5. Given the discount rate of 10%, what is the total present value of cash flow of this project?

2)Melinda needs to accumulate $50,000. In order to do so, she plans to save at the start of every year starting today for 10 years with an interest rate of 10% per annum. How much will she need to deposit every year to reach that amount?

Using appropriate models, analyse market outcomes for comprehensive car insurance in the following way:

(a) Analyse how a risk-averse individual makes decisions facing uncertainty. (10 Marks)
(b) Analyse the best pricing strategies for insurance firms, assuming that there are individuals with different levels of risk aversion and that the firms in this market collude in their pricing strategies. (5 Marks)
(c) Discuss how the outcomes in (b) would differ if you assumed perfect competition. (5 Marks)
(d) Discuss the outcomes when the suppliers lack information about the level of risk facing each potential insuree. Carefully explain why some potentially beneficial economic transactions can “go missing” in the presence of this information asymmetry. (10 Marks)

Neha would retire 30 years from today and she would need ₹ 6,00,000 per year after her retirement, with the first retirement funds withdrawn one year from the day she retires. 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 lump sum 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?