Economics Answers

Assume that both the supply of bottled water and the demand for bottled water rise during the summer but that supply increases more rapidly than demand. What can you conclude about the direction of impacts on equilibrium price and equilibrium quantity?

The average total cost of producing cell phones in a factory is R300 at the current output level of 100
per week. If total fixed cost is R20 000 per week, then:
A. average variable cost is R100.
B. average fixed cost is R400.
C. total cost is R10 000.
D. total variable cost is R30 000.
E. marginal cost is R300.

Explain how expectations about future sales will affect investments?

Ricardo has a monthly budget of $20 to spend on movie tickets and wine. The price of a movie tickets is $10 and the price of a bottle of wine is $5. a. Calculate the relative price of wine in terms of movie tickets? (1 mark)

b. Calculate Ricardo’s real income in terms of wine? (2 mark)

c. Calculate Ricardo’s real income in terms of movie tickets? (2 mark)


d. Calculate the equation of Ricardos budget line with wine on the left side. (3marks).


e. Draw a graph for Ricardos budget line with quantity of movie tickets on the X-axis and quantity of wine on the Y axis. (2 marks).

Find the stock of money in an economy where the velocity of money is 3, long run real output is 700,000 units and the long run price is $6.

If the stock of money in a given economy is 350,000; long run real output equals 420,000units while the fraction of National Income held by the public is 2/3, what will be the long run price level in the economy?

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?

An individual’s labour supply curve is positively sloped when:

Suppose the population over 15 is 20 million, the labour force Participation rate is 60%, and the unemployment rate is 5%. If the labour force grows by 3% and employment grows by 2%, what does the unemployment rate become?

20. Which of the following would be an indication that a nation has a persistent balance of
payment deficit?
A. it is buying gold abroad
B. it is borrowing abroad to finance capital investments
C. its imports exceed exports
D. Its holdings of foreign reserves are declining.