Economics Answers

In some countries a national minimum wage or a “living wage” has been set by the government. What are the drawbacks of such an approach to dealing with low pay?

Which of the following factors will increase the size of the multiplier?
1. An increase I'm government spending.
2. An increase in the marginal propensity to consume.
3. An increase in the marginal propensity to save.
4. An increase in autonomous spending.

The equilibrium level is R17 000m. The full employment income is R22 000m and the marginal propensity to consume is 0,8. By how much should the investment expenditure change to bring nations income to full employment equilibrium?

Which of the following statements are correct about the 45-degree line?
1. A negative relationship exists between aggregate spending and aggregate income.
2. At any point above the 45-degree line, there is excess supply of goods and services.
3. When aggregate spending is greater than total production, firms experience an unplanned increase in their inventories and respond by lowering their production.
4. The 45-degree lime shows the equality between the variable measured on the vertical axis and the variable measured on the horizontal axis.

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 a 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.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.

What is the difference between the short run and the long run?

From a financial and economic point of view, was the GM bail out a good option and why?

A company produces two competing products whose demand schedules are
q1 = 219 - 1.8p1 + 0.5p2
q2 = 303 - 2.1p2 + 0.8p1
What price should it charge in the two markets to maximize total sales revenue?

A purely competitive wheat farmer can sell any wheat he grows for $30 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.



a. Use the table below to answer the following questions. How many bushels will each of the farmer’s five acres produce? How much revenue will each acre generate? What are the TR and MR for each acre?



Instructions: Enter your answers as whole numbers.





b. If the marginal cost of planting and harvesting an acre is $21,000 per acre for each of the five acres, how many acres should the farmer plant and harvest?
acres.

A purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $17.50 per unit for the first 50 units and then $30.00 per unit for all successive units.

Instructions: Round your answers to 2 decimal places.

a. Does price equal or exceed average variable cost for the first 50 units? .

What is the average variable cost for the first 50 units? $
.


b. Does price equal or exceed average variable cost for the first 100 units? .

What is the average variable cost for the first 100 units? $
.


c. What is the marginal cost per unit for the first 50 units? $
per unit.

What is the marginal cost for units 51 and higher? $
per unit.


d. For each of the first 50 units, does MR exceed MC? .

What about for units 51 and higher? .


e. What output level will yield the largest possible profit for this purely competitive firm?
units.