Economics Answers

Which of the following is true concerning the substitution effect of a decrease in price?
1) it will lead to an increase in consumption only for normal food
2) it will always lead to an increase in consumption
3) it will lead to an increase in consumption only for an inferior good
4) it will lead to an increase increase in consumption only for a Giffen good
5) it will lead to a decrease in consumption for a Giffen and inferior good

Consider two goods, apples and pears, available for consumption. Assume that the price of apples changes while the price of pears remains fixed. For these two goods, the price consumption curve illustrates:
1) relationship between price of X and consumption of Y
2) utility-maximizing combinations of X and Y for each price of X
3) relationship between the price of Y and consumption of X
4) utility-maximizing combinations of X and Y for each quantity of X
5) combinations of apples and pears that a consumer can afford to buy

Indifference curves are convex to the origin because of.....
1) transitivity of consumer preferences
2) assumption of diminishing MRS
3) assumption that more is preferred to less
4) assumption of completeness
5) none of the above options

A consumer prefers comedy movies to action movies, and prefers actions movies to reality shows. Therefore comedy is preferred to reality shows. The assumption that leads to this conclusion is:
1) transitivity
2) completeness
3) all goods are good
4) diminishing MRS
5) assumption of rationality

Monthly supply of soccer tickets is given by the equation: Qs = 15,000 + 43.75P. At a price of R800, what is the price elasticity of supply?

Marula enterprises has developed a new local brew called Stiff Neck. The market demand for this product is given as follows: Q=240-4P. If stick Neck is priced at 40$, what is the point elasticity of demand?

Demand for potatoes is: Qd= 120-p
The supply of potatoes is Qs = 5p

What is the equilibrium price of potatoes?

The balance sheet of a sole trader revealed the following position.
Fixed Assets
Land and buildings
R
9 170
R
Equipment at cost less depreciation 15 570
Goodwill at cost less amounts written off 10 250 34 990
Investment in shares at cost 2 200

Current Assets
R
R
Trading stock
45 840
Sundry debtors less bad debts written off
19 350
Cash at bank
10 920
76 110
113 300
=
A
Less: Current Liabilities
R
Sundry creditors and accruals
77 600
=
L
35 700
Owner's Interest
R
R
Capital
28 400
Profit for the year
7 300
35 700
=
0
Required
Answer the following questions:
(a) Are the assets correctly classified? If not, re-arrange them and give your reasons for doing this.
(b) What is the current ratio? Is it satisfactory?
(c) What is the acid-test ratio? Is it satisfactory?
(d) Is the business solvent? Give your reasons.
(e) Is the business overtrading? Give your reasons.
(f) What is the profitability ratio of the business?

You have been requested by the shareholders to prepare a detailed report analysing the financial performance and financial position of COPPERBELT ENERGY CORPORATION PLC for the year ended 31st December 2018. The Annual Report and Accounts for Copperbelt Energy Corporation Plc are on the website(https://cecinvestor.com/cec-2018-annual-report-erratum/).

REQUIRED: Prepare a REPORT to the shareholders providing a detailed analysis of the Financial performance and Financial Position of CEC company based on the ratios calculated and any other relevant information from the Annual Report:

Assume that cooking gas and stoves are complements. When the price of cooking has goes up the demand curve for stoves:
1) shifts to the left
2) shifts to the right
3) remains constant
4) shifts to the right initially and then returns to its original position
5) shifts to the left simultaneously with demand curve for cooking gas