Economics Answers

the
company
Old
Co has a
current stock
price of $210 per share
. L
ast year
they
paid an
annual dividend of $10 per share. Historically the dividend growth was 5% per year
;
the next
dividend
payment will be $
1
0.50
. What is the discount rate implied by this firm?

According to the Dept of Labour’s new rates, domestic workers working in Area A who work more than 27 ordinary hrs p/w, must be paid a minimum of R13,69 p/h.
Workers who work fewer than 27 hrs p/w, must be paid a minimum of R16,03 p/h.
This will mean that a domestic worker who works 45 hrs p/w will now earn a minimum of R2 669,24 a m.
Gardeners, drivers or people who look after children, the aged, sick, frail or disabled in a private household, all qualify as domestic workers.
Q:
With the aid of a diagram, discuss the welfare effect of this new legislation if the new minimum wage is (1) below the equilibrium wage and (2) above the equilibrium wage rate with labour hours as your quantity variable.

China’s government exempted the micro, small and medium-size enterprises from making employer contributions to pension and work-related injury insurance schemes. Also, allowed the larger enterprises to reduce the same by 50%. (Hint: It will have a direct impact on the cost of employment, or can say will ease enterprises’ cash-flow constraints.) What will happen to the output in China using IS-LM framework.

Consider the following demand function for game consoles:
(D): P = 400 - 20Q
1. Assume that the price decreases from 150$ to 100$.
a. Calculate the price elasticity of demand.
b. Is the demand elastic, inelastic or unit elastic?
c. What happens to Total Revenue?
2. Assume that the price decreases from 75$ to 50$.
a. Calculate the price elasticity of demand.
b. Is the demand elastic, inelastic or unit elastic?
c. What happens to Total Revenue?

General Electric is an mp3 players’ producer. Demand and supply functions of mp3 players are as
follows:
QD= 1,450 - 25P (Demand)
QS= -100 + 75P (Supply)
Where P is the price of mp3 players.
1. Calculate the market equilibrium price/output combination.
2. What will happen in the market if the price of mp3 players increased to $40?
3. How will the market adjust?
4. What will happen in the market if the price of mp3 players increased to $10?
5. How will the market adjust?

A government has recently stressed its commitment to the future of youth and accordingly will subsidize you $2 for every $1 you spend on textbooks up to a max of $2100. Your income is $1500 and the price of books is $30 and the price of all other goods is $10. Whats the intercept of the original budget line? What’s the intercept for the budget line if there’s a grant with no maximum? At what point would you obtain max grant? What is the amount of conditional grant?

Assuming that South Africa Economy is over heated (a period of very high level of inflation and production). The government decides to slow down the economy by decreasing public expenditures. Explain by the use of graphs, the impact of such fiscal policy on aggregate output. In your explanation, describe the interaction between money narket, IS-LM and AD-AS Model

DOMESTIC workers will no longer adjusted the minimum wage for domestic workers, with effect from December last year.

The announcement was made by the Department of Labour Minister Mildred and Oliphant and it coincided with the signing into law of the National Minimum Wage Bill by President Cyril Ramaphosa.

According to the Department of Labour's new rates, domestic workers working in Area A(bigger metropolitan areas) who work more than 27 ordinary hours per week, must be paid minimum of R13, 69 per hour.

Workers who work fewer than 27 hours per week, must be paid a minimum of R16, 03 per hour.

This will mean that a domestic worker who works 45 hours per week will now earn a minimum of R2 669,24 a month.

Gardeners, drivers or people who look after children, the aged, sick, frail or disabled in a private household, all qualify as domestic workers.

Suppose that the economy is characteised by the following behavioral equations C=Co +c1Yd
Where : Co=280
I=270
G=300
T=200
Marginal propensity to save (MPS) is 0.4(or 40%)
Solve for
a) equlibrum Gdp (Y)
b) disposable income (Yd)
C) Consumption spending (C)

1. Suppose the country of Z witnesses an increase in the demand for loanable funds, driven by a recovery from an economic crisis that hit the country few years ago. Will the equilibrium quantities of savings and investment change by more or less than the initial change in the demand? Explain the reasons for the answer.

2. Residents of the land of Q use rubies as money. Every ruby is used, on an average, 4 times per year to carry out transactions. The total supply of rubies is thirty million.
(a) What is the level of aggregate nominal spending in Q according to the quantity theory of money?
(b) Suppose now that the residents of Q use less money to conduct same number of transactions. What is the effect on the velocity of money?
(c) Suppose a new financial product named “bonds” introduced in economy of Q. How the introduction of this new financial product will affect the willingness to hold rubies and consequently the velocity of rubies.