Economics Answers

short note on nominal rigidity in wage rate and prices.

Consider a couple’s decision about how many children to have. Assume also that over a life time a couple has 325000 hours of time to either work or raise children. The wage is 10 Rand per hour. Raising a child takes 25 000 Hours of time.
i. Draw the budget constraint showing the trade-off between lifetime consumption
and number of children. (Ignore the fact that children come only in whole
numbers) Show indifference curves and an optimal choice for the couple.
ii. Suppose the wages decrease from 10 Rand to 8 Rand per hour. Show how the budget constraint shifts. Using income and substitution effects, discuss the
impact of the change on number of children and lifetime consumption.
iii. Consider now that the wage is a normal good, answer with a graph

Identify and describe four types and sources of data and information required for budgeting and forecasting. Explain how data is applied to budgeting and forecasting processes.\

Economists often use a what ? to make decisions about economic matters.

equilibrium price of ice cream is 2euro per scoop, how would the market get to equilibrium if the price were originally 1euro per scoop?

Explain why the Average total cost curve and the Average variable cost curve moves closer together as output expand?

Consider a couple’s decision about how many children to have. Assume also that over a life time a couple has 325000 hours of time to either work or raise children. The wage is 10 Rand per hour. Raising a child takes 25 000 Hours of time. i. Draw the budget constraint showing the trade-off between lifetime consumption and number of children. (Ignore the fact that children come only in whole numbers) Show indifference curves and an optimal choice for the couple. ii. Suppose the wages decrease from 10 Rand to 8 Rand per hour. Show how the budget constraint shifts. Using income and substitution effects, discuss the impact of the change on number of children and lifetime consumption. iii. Consider now that the wage is a normal good, answer with a grap

4. Which of the following is/are true about inflation?
a) The reason for demand-pull inflation is that the demand expansion leads to the total demand curve shifting to the right.
b) The reason for demand-pull inflation is that rising cost of production makes the aggregate supply curve shift to the left
c) The reason for cost-push inflation is that demand expansion leads to the total demand curve shifting to the right.
d) The reason of cost-push inflation is that rising cost of production makes the aggregate supply curve shift to the left.

California Mining is evaluating the introduction of a new one production process.Two alternatives are available.Production process A an inital cost of $25000 a 4 year life and a $5000 net salvage value and use of Process A will increase net cash flow by $13000 year for each of the 4 years that the equipment is in use
Production process B also requires an initial investment of $25000 will also last 4 years and it's expected salvage value is zero but process B will increase net cash flow by $15247 per year
MANAGEMENT believe that risk= adjusted discount rate of 12 percentage should be used for process A
If California Mining is to be indifferent (same NPV for Process A and B) between the two process what risk adjusted discount rate must be used to evaluate B ?

Suppose a 4% increase in the economy leads to an 8% increase in soft drink consumption. Then the income elasticity of demand is:

a. negative, so soft drink are an inferior good
b. negative, so soft drinks are a normal good
c. positive, so soft drink are a normal good
d. positive, so soft drinks are an inferior good