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explain the backward bending supply curve of labour through the price effect method
24. Explain the Hausman test as it is applied in discriminating between fixed effects and random effects methods.
22. Suppose you have a data set on wealth (w), and access to credit (credit) for 1000 farmers randomly selected from the Gamo-Gofa Zone over the period 2015 to 2020. The data includes individuals who did not participate in the credit scheme.
(a) Suppose you want to evaluate how wealth changed over time as a result of the credit facility. How do you specify your model?
Indicate what impacts the parameters in your model measure.
[Hint: Recall the importance of time dummies].
(b) Suppose you have a reason to believe that level of education (E), gender of the head of the household (gender ), land size (land), distance from urban centers (distance), are other major variables that are believed to affect wealth status. Can you use fixed effects method in estimating your model in (a) by including theses variables? Why or why not? What other means can you craft to apply fixed effects method on the model?
(c) Given the information in (b), under what condition a random effects method could be an option?
If the offer curve of country A is constant, but the country B is shifts right ward due to increase income of country B. What is Equilibrium term of trade
If the demand function for a certain product isP=60−3,5Q,
P=60−3,5Q,
where P
P and Q
Q are the price and quantity respectively, determine the point price elasticity of demand if the price P
P equals R18.
1. Explain in words;
a) What the budget line is.
b) Suppose we have two goods. The price of good one is 10 and the price of good two
is 15. The income is 30. Construct a diagram, with the quantities on the X and Y
axes and draw a budget line in the diagram.
c) How do the prices and do income affects the shape of the graph? What happens if the
price of one good rises? What happens if income increases?
d) State marginal rate of transformation in words.
e) Calculate MRT in question (b).
2. Given utility (𝑥, 𝑦) = √𝑥
√𝑦
, Px = 2, Py = 5 and M = 400, find:
a) The demand equation for X and Y.
b) The utility maximizing levels of X and Y.
c) The maximum utility
d) The MRSx,y at the optimum level
Smart Toys, currently has no debt, expects an EBIT of $45,000 every year forever. Its cost of equity is 16 percent. The corporate tax rate is 30 percent. The company can borrow at 8 percent.
a.What is the current value of the company?
b.What will the value of the firm be if the company takes on debt equal to 20 percent of its unlevered value? What if it takes on debt equal to 60 percent of its unlevered value?
c. What will the value of the firm be if the company takes on debt equal to 55 percent of its levered value? What if the company takes on debt equal to 40 percent of its levered value?
How to compute (pie chart) the sectoral percentage contribution to gross value added at the basic price.
To sustain in a perfectly competitive market, a firm should:
For each of the following events, describe in words what happens to the supply, demand, quantity supplied, and quantity demanded in the market for new cars. a. The Raju Auto workers get a large raise. b. A new technology is introduced in the factory. c. The government subsidizes bus tickets resulting in a large reduction in the cost of a bus ticket. d. Real incomes grow and new cars are a normal good. e. There is machinery break down in the industry.
