Economics Answers

Marginal propensity to save is 0.3. Calculate MPC and the expenditure multiplier.

Prove the pythagorus theorem.

How would you expect the introduction of Uber to affect the market for traditional taxi services?

Which factors are considered when deciding how to make goods & services?

Consider a perfectly competitive market in the short run, assume that the demand curve is given as shown below. P=100-4Q, also you are told that the total cost is given as TC=50+4Q+2Q^2 and the marginal cost MC=4+4Q. How many firms are in the industry in the short run?

Consider an individual who earns $100,000, pays $7,000 in child care expenses for one child, pays the maximum ($26,010) in Registered Pension Plan (RPP) contributions, makes charitable donations of $200 (15 percent credit), and pays $20,000 in medical expenses. Medical expenses in excess of 3 percent of net income are deductible at 20 percent. The statutory marginal tax rate is 17 percent. What is the federal tax payable? What is the individual’s actual (effective) marginal tax rate? [6 marks]

A demand function is given as Qx=500-2Px+10Y+3Py where Qx=Quantity demanded for x goods
Px=Price of X goods
Py=Price of Y goods
Y=Income of consumer
Find price elasticity of demand at price 50
Find income elasticity of demand at price 1000
Find cross elasticity of demand of Y goods at price 40

3. In the January 17, 2004 issue of The Economist, the following statement was made:

“Nor is a fall in the unemployment rate, from 5.9% in November to a 14 month low of 5.7%, much consolation. Most of the fall was accounted for by people leaving the labour force altogether.”

Explain how this decline in the measured unemployment occurred. Why was the decrease in unemployment not much consolation?

Consider an individual who earns $100,000, pays $7,000 in child care expenses for one child, pays the maximum ($26,010) in Registered Pension Plan (RPP) contributions, makes charitable donations of $200 (15 percent credit), and pays $20,000 in medical expenses. Medical expenses in excess of 3 percent of net income are deductible at 20 percent. The statutory marginal tax rate is 17 percent.
What is the federal tax payable? What is the individual’s actual (effective) marginal tax rate?

2. The (total) cost function is given by C = 50 + 60Q – 18Q2 + 2Q3
i. Draw a graph to illustrate AC, AVC, and MC functions for quantities Q on the interval between 1 and 10. Make sure you show (put the numbers there) where exactly the MC curve intercepts AVC and AC curves.
j. If the price is P = 60, calculate the profit-maximizing firm’s profit.