Economics Answers

A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. This firm is earning $18 on every $200 invested by its founders.



Instructions: Enter your answers as whole numbers.



a. What is its percentage rate of return?
percent.



b. Is the firm earning an economic profit? .



If so, how large?
percent.



c. Will this industry see entry or exit? .



d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
percent.

There are 300 purely competitive farms in the local dairy market. Of the 300 dairy farms, 298 have a cost structure that generates profits of $36 for every $600 invested.



Instructions: Enter your answers as whole numbers.



a. What is the percentage rate of return for these 298 dairies?
percent.



b. The other two dairies have a cost structure that generates profits of $52 for every $400 invested. What is their percentage rate of return?
percent.



c. Assuming that the normal rate of profit in the economy is 10 percent, and firms cannot copy each other's technology, will there be entry or exit? .



Will the change in the number of firms affect the two that earn $52 for every $400 invested? .



What will be the rate of return earned by most firms in the industry in long-run equilibrium?
percent.



If firms can copy each other’s technology, what will be the rate of return eventually earned by all firms?
percent.

Which of the following statements is false regarding an employee's contribution into a 401(k) tax deferred retirement account?

a.The employee's contributions are not subject to FICA tax.

b.Upon retirement, the employee will receive their contributions back in the form of regular payments.

c.None of these statements are correct.

Saudi Arabia and Russia are two countries where the state controls much of the oil production. If these countries attempt to collude they will agree to

Describe with help of diagram intersection between the short run average total cost curves and long run average total cost curve given that firm has five palnt to consider viz 1,2,3,4,5(ASCENDING ORDER of their size) wherein plant size 3 turn out to be optimal plant size in long run

According to the dept of Labour domestic workers who work less more 27 hours to be paid R13. 69 per hour. Workers who work less than 27 hours per week to be paid R16.03 per hour.
With the aid of a diagram, discuss the welfare effect of this new legislation if the minimum wage is 1.beliw the equilibrium wage and 2.above the equilibrium wage rate with Labour hours as your quantity variable.

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.

Italy’s government providing the income support to laid-off workers. How would this step by the government of Italy affect the output in the short run in Italy using IS-LM framework.

According to the Department of Labours new rates , domestic workers working in Area A (bigger than metropolitan areas) who work more than 27 ordinary hours per week must be paid a minimum of R13,59 per hour. Workers who work fewer than 27 hours per week must be paid a minimum of R16,03 per hour. This means that a domestic worker who works 45 hours per week will now earn a minimum of R2669,24 . 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

On January 1, 2009 Akil Rampaul's balance sheet was as follows:

ASSETS
Plants & Machinery 20400
Accounts Receivable 7817
Cash 1183
Furniture & Fittings 10840
Inventory 5000
Prepaid Insurance 160


LIABILITIES
Accrued Wages 940
Accounts Payable 5340
Capital 35000
Bank Overdraft 4120

During the first week, Rampaul recorded the following transactions.

1. Sold machinery with the net book value of $2000 for $1200 cash and bought new machinery for $6900 paying by cheque.

2. Collected $1102 in cash from debtors

3. The inventory was revalued at $4300

4. Insurance of $20 for one week was used up

5. Creditors were paid $3340 by cheque

6.The outstanding wages were paid in cash

7. Received a cheque for $13000 from his brother, Asa, as loan to be repaid in two years


Prepare Akil Rampaul, a revised balance sheet as at January 7, 2009 to show the effects of the first week's transactions.