Economics Answers

What is the Equation of Exchange presented in the form of an Identity? ___________________________________________________ _____________ where: M represents Money Supply; V represents Velocity; ≡ means must be equivalent to; P represents Price; and Q represents Real G DP.

(a) What is the proÖt-maximizing amount of labor for this monopson- istic Örm? What wage will it pay each unit of labor? Illustrate your answer diagrammatically and explain your result intuitively.
(b) Show the wage and the employment level that would prevail under perfect competition. If there is a deadweight loss under monop- sony, identify the area that represents it in a diagram.
(c) Let wmin be the minimun wage imposed by the government, Use the diagram in part (a) and discuss the e§ect of minimum wage on the wage and employment level. If there is a deadweight loss, identify the area that represents it. Is it smaller or larger?
(d) Suppose Company X is able to practice the first-degree wage dis- crimination. Whatistheemploymentlevelinthiscase? Identify it in the same graph. Is there any deadweight loss?

Foreign domestic helpers in Hong Kong are subject to an effective minimum wage. Due to Wuhan coronavirus, Hong Kong employers need to provide free hotel accommodation to newly employed foreign domestic helpers for their 14-day quarantine before the helpers can start to work. Besides, many workers in the Philippines have lost their jobs because of the outbreak of Wuhan coronavirus in the Philippines. With the aid of a diagram, explain how these would affect the time foreign domestic helpers need to wait before receiving a job offer from Hong Kong.

Suppose the goods market in an economy is represented by the following equations.
C = 500 + 0.5YD I = 500 – 2000 i + 0.1Y G = 500
X = 0.1Y* + 100e Q = 0.2Y - 100e T = 400
Y* = 1000 i = 0.05 (5%) e= 1
Z = C + I + G + X - eQ Y = Z (equilibrium condition)

a. Solve the model and find the equilibrium value for GDP (Y).
b. Given your answer in a, calculate C, I, X and Q.
c. At this level of output, is the economy experiencing a trade surplus or deficit?
d. Suppose G increases by 100 (to 600). Calculate the new equilibrium level of output. What is the size of the multiplier?
e. Based on your answer to d, calculate the new level of Q. Calculate the change in net exports caused by this increase in G.
f. Suppose the marginal propensity to imports (in imports equation) decreases from 0.2 to 0.1. Assume all other variables are the same. What happens to the size of multiplier? Compare the changes in Y caused by the increase in G in part d and with a new marginal propensity to imports (0.1).

• Total Output: R 30
• Total Income: R 30
• Consumption: R 22
• Government Spending: R 6
• Total tax revenue: R 5.5
• Transfer payments: R 1.5
Use the above data to calculate:
a. disposable income, savings and net taxes.
b. Is the government running a budget surplus, budget deficit, or balanced budget? Demonstrate.
c. Determine planned investment. (note that investment is equal to the sum of private and public saving)

Consumers expect higher price levels in the future. What happens to aggregate supply and aggregate demand what happens to the price level and real GDP

The stock market crashes; billions are lost. What happens to aggregate supply and aggregate demand. What happens to price level in real GDP?

Pessimistic about the future firms cancel plans to build new factories what happens to aggregate supply and aggregate demand include what happens to price level in real GDP

Two firms compete in Stackelberg. The leader, firm L, has no production costs. The marginal cost of the follower, firm F, is equal to 3 with probability 0.25, and to 7 with probability 0.75. The follower knows its cost, but the leader only knows the probability distribution and associated costs. The demand function is given by p = 100 – 2 yL – 2 yF . Calculate quantities and prices in the Stackelberg equilibrium

Two firms compete in Stackelberg. The leader, firm L, has no production costs. The marginal cost of the follower, firm F, is equal to 3 with probability 0.25, and to 7 with probability 0.75. The follower knows its cost, but the leader only knows the probability distribution and associated costs. The demand function is given by p = 100 – 2 yL – 2 yF . Calculate quantities and prices in the Stackelberg equilibrium.