Economics Answers

Discuss whether prices are less important in allocating scarce resources in a mixed economy compared with a market economy

The rate of interest is a price:
a. Of what is it the price? (1 mark)
b. What determines this price? (Sketch a relevant graph of the money market). (2 marks)
c. What factors influence the demand for money? (2 marks)
d. What factors influence the supply of money? (2 marks)
e. If the money market is in short-run equilibrium, explain the adjustments that will take place for:
i) an increase the in money supply (2 marks)
ii) increase in the demand for money (2 marks)

The rate of interest is a price:
a. Of what is it the price? (1 mark)
b. What determines this price? (Sketch a relevant graph of the money market). (2 marks)
c. What factors influence the demand for money? (2 marks)
d. What factors influence the supply of money? (2 marks)
e. If the money market is in short-run equilibrium, explain the adjustments that will take place for:
i) an increase the in money supply (2 marks)
ii) increase in the demand for money (2 marks)

The rate of interest is a price:
a. Of what is it the price? (1 mark)
b. What determines this price? (Sketch a relevant graph of the money market). (2 marks)
c. What factors influence the demand for money? (2 marks)
d. What factors influence the supply of money? (2 marks)
e. If the money market is in short-run equilibrium, explain the adjustments that will take place for:
i) an increase the in money supply (2 marks)
ii) increase in the demand for money (2 marks)

a. Work through the problem below and show working for all variables (1-10) in addition to
totals of columns and rows in the matrix. (10 marks)
C = 300 + 0.8YD (Private consumption)
YD = Y + TR – T (Private Disposable income)
T = 80 + 0.1Y (Total taxes)
G = 300, TR = 100 (Gov. expenditure and transfer payments respectively)
I = 450 (Private investment)
X = 200 (Total exports)
IM = 120 + 0.2Y (Total imports)
Y = C + I + G + X – M (Goods Market Equilibrium condition)
Policy variables: Fiscal policy (G, t and TR), Monetary Policy: (N/A)

A firm uses Labour (L) and capital (K) to product commodity (Y). The quantities of the inputs and outputs are shown in the table below.
L 0 1 2 3 4 5 6 7 8 9 10
K 90 90 90 90 90 90 90 90 90
Y 0 100 250 420 560 675 760 820
860 885 900

a) Calculate the average and marginal products of labour and plot them. What economic factors explain the shape of these curves? What is the range of output corresponding to the second stage of production?
b) Assuming that the wage rate is Rs.340/- and the rental rate on capital is Rs.0.5/-, calculate the short run average variable cost, marginal cost, average fixed cost, average total cost, total variable cost., total fixed cost and total cost. Plot all these curves.
c) Does the average variable cost cuts the marginal cost at the minimum point of the marginal cost? Why is this always the case? What is the relationship between the marginal cost and average variable cost in the second stage of production.

The demand equation for a firm operating in a monopolistically competitive market is given by P=4.75-0.2Q. Average cost for a firm is given by AC= 5-0.3Q+0.01Q^2. The firm is in long run equlibrium. Find profit maximizing price and quantity

What determines this price? (Sketch a relevant graph of the money market.
What factors influence the demand for money?
d. What factors influence the supply of money?
e. If the money market is in short-run equilibrium, explain the adjustments that will take place for: i) an increase the in money supply.

ii) increase in the demand for money
this are my questions.

The rate of interest is a price:
a. Of what is it the price?
b. What determines this price? (Sketch a relevant graph of the money market).
c. What factors influence the demand for money?
d. What factors influence the supply of money?
e. If the money market is in short-run equilibrium, explain the adjustments that will take place for:
i) an increase the in money supply
ii) increase in the demand for money

Suppose you are "recommending" monetary policy. The economy is experiencing a sharp and prolonged inflationary trend, What change in open market operations would you recommend?