Economics Answers

Question 6. Consider a perfectly competitive market. The equilibrium price is 12. The equilib- rium quantity is 440. The supply curve is Q (P ) = 200 + 20P . Which of the following could be the demand curve in this market?
a) Noneoftheotheranswersiscorrect.
b) Q(P)=500−5P
c) Q(P)=300−10P
d) Q(P)=1000−10P

how saving contributes to economic growth

Q. 6) There are substitutes for the Kindle. Sony (Reader), Barnes & Noble (Nook), and others make e-book readers. Presumably these companies are also negotiating with textbook publishers. Each e-book reader uses its own format. When you buy an e-book for your Kindle, don’t expect to be able to read it on a Nook. Thus the e-books and the specific e-book reader are perfect complements.

But the serious competition is likely to come from an unexpected direction: tablet computers. Apple’s iPad has been a major success. The iPad includes iBooks, Apple’s version of an e-book reader.

Question: There is obviously competition in this market. What effect is increased competition likely to have on the price of books offered as e-books? What effect will that have on the price of paper books?

Consider the following information:

Bear Market Normal Market Bull Market
Probability 0.3 0.5 0.2
Return on Stock A -10% 0% 40%
Return on Stock B -5% 5% 50%

a) Calculate and comment upon the expected return and standard deviation of A and B.

b) Assuming that you have £20,000 to invest. You have decided to invest £10,000 in stock A and the remainder in stock B. Calculate and comment upon the expected return and standard deviation of your portfolio if the correlation between A and B is 0.5.

c) Does a fully diversified portfolio include any risk? Use and explain appropriate diagrams in your answer.

What is the GDP deflator, and how does it differ from the consumer and producer price indexes? Under what circumstances might it be a more useful measure of price than the CPI and PPI?

If real interest rate is 4 per cent, and inflation is 7 per cent, what is the value of nominal interest rate?

What relationship does the demand for money have with income and interest rate

Suppose autonomous expenditure increases by 1 trillion, and as a result, equilibrium income increases by 3 trillion, what is the value of the multiplier?

Using the Keynesian transmission mechanism, illustrate and explain the effect of an decrease of repo rate in the economy

Using a diagram, show the effect of an increase in autonomous expenditure on equilibrium income and expenditure