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You are working with the manager of an irrigation facility who is interested in installing a
more efficient pumping system. The proposed system costs $15,000 and you project that it will
reduce the annual utility costs by $2,000. After five years, you expect to upgrade the system for
$4,000. This upgrade is expected to further reduce utility costs by $1,000 annually. The annual
effective interest rate is 7% and the life of the system, after upgrade is 50 years. What is the
Present Value of the investment in the system?
more efficient pumping system. The proposed system costs $15,000 and you project that it will
reduce the annual utility costs by $2,000. After five years, you expect to upgrade the system for
$4,000. This upgrade is expected to further reduce utility costs by $1,000 annually. The annual
effective interest rate is 7% and the life of the system, after upgrade is 50 years. What is the
Present Value of the investment in the system?
You have been hired as an economic consultant to assess the potential of profitably entering the
market for gourmet coffee (examples are Starbucks and Coffee Bean). The firm that has hired you
would like for you to make your recommendations on what are the most important factors that
must be considered in order to successfully penetrate the market. The firm also wants your advice
(in addition to production of the coffee itself) on its interest in opening several distribution or sales
points. It would like to have your recommendation on the factors that would be most beneficial to
determining the correct location and size for the outlets.
Determine and discuss the most probable market structure of the coffee industry; then prepare a
proposal which will be presented to the firm that is hiring you as consultant.
market for gourmet coffee (examples are Starbucks and Coffee Bean). The firm that has hired you
would like for you to make your recommendations on what are the most important factors that
must be considered in order to successfully penetrate the market. The firm also wants your advice
(in addition to production of the coffee itself) on its interest in opening several distribution or sales
points. It would like to have your recommendation on the factors that would be most beneficial to
determining the correct location and size for the outlets.
Determine and discuss the most probable market structure of the coffee industry; then prepare a
proposal which will be presented to the firm that is hiring you as consultant.
Justo & Company use third-degree price discrimination in selling its product. The demand
equations for the two markets are as follows:
Market 1 P1 = 2.46 - 0.2Q1
Market 2 P2 = 4.54 - 0.8Q2
The marginal cost is $1.20
a. Determine the profit maximizing price and quantity in each market.
equations for the two markets are as follows:
Market 1 P1 = 2.46 - 0.2Q1
Market 2 P2 = 4.54 - 0.8Q2
The marginal cost is $1.20
a. Determine the profit maximizing price and quantity in each market.
Justo & Company use third-degree price discrimination in selling its product. The demand
equations for the two markets are as follows:
Market 1 P1 = 2.46 - 0.2Q1
Market 2 P2 = 4.54 - 0.8Q2
The marginal cost is $1.20
a. Determine the profit maximizing price and quantity in each market.
equations for the two markets are as follows:
Market 1 P1 = 2.46 - 0.2Q1
Market 2 P2 = 4.54 - 0.8Q2
The marginal cost is $1.20
a. Determine the profit maximizing price and quantity in each market.
A competitive firm has the following production function:
: ;(<) 400< 60< 6 6<?
Where y = output, x = input. The firm faces an output price of P = 10 and an input
price of W = 5440.
i) Write a profit function of this firm in terms of output and input prices and the
input level.
ii) What is the profit maximizing level of input for this firm? Verify that the input
level you choose is the profit maximizing point.
iii) Find the marginal product (MPx) of the variable input.
iv) Verify that P(MPx) = W at the profit maximizing input level.
b) What economics interpretation would be you attribute to the method of finding the
‘time-path’ using a difference equation? Explain your answer with the help of the
Cobweb model.
: ;(<) 400< 60< 6 6<?
Where y = output, x = input. The firm faces an output price of P = 10 and an input
price of W = 5440.
i) Write a profit function of this firm in terms of output and input prices and the
input level.
ii) What is the profit maximizing level of input for this firm? Verify that the input
level you choose is the profit maximizing point.
iii) Find the marginal product (MPx) of the variable input.
iv) Verify that P(MPx) = W at the profit maximizing input level.
b) What economics interpretation would be you attribute to the method of finding the
‘time-path’ using a difference equation? Explain your answer with the help of the
Cobweb model.
Calculate GDP using the expenditure approach by adding up the data in the left set of the column.
Suppose that the economy is in recession with a recessionary gap of $1 trillion. The MPC is 0.9 and the tax rate on income is 30%. Answer the following
(a) Compute the value of the multiplier.
(b) Suppose the AS curve is completely flat. What would be the change in G needed to make the gap equal to zero?
(c) Would the change in G you found in b. be enough if the AS curve was positively sloped? Explain using the appropriate graph.
(a) Compute the value of the multiplier.
(b) Suppose the AS curve is completely flat. What would be the change in G needed to make the gap equal to zero?
(c) Would the change in G you found in b. be enough if the AS curve was positively sloped? Explain using the appropriate graph.
Explain how each of the following transactions enters the Nigerian balance of
payments accounts. Indicate the specific component of the BOP account that is
affected by each transaction. Discuss only the transactions described. Do not be
concerned with possible offsetting transactions.
a) The Nigerian government sells 20m barrels of oil to Ghana.
b) The Central Bank of Nigeria sells dollars to and buys Niara from the US
Federal Reserve.
c) Guaranty Trust Bank Plc (Nigeria) receives interest on loans it has made to
Ghanaian companies.
d) A Nigerian Bank borrows from a Ghanaian bank.
e) A Nigerian oil company buys insurance from a British insurance company to
insure its oil rigs in the Niger Delta
payments accounts. Indicate the specific component of the BOP account that is
affected by each transaction. Discuss only the transactions described. Do not be
concerned with possible offsetting transactions.
a) The Nigerian government sells 20m barrels of oil to Ghana.
b) The Central Bank of Nigeria sells dollars to and buys Niara from the US
Federal Reserve.
c) Guaranty Trust Bank Plc (Nigeria) receives interest on loans it has made to
Ghanaian companies.
d) A Nigerian Bank borrows from a Ghanaian bank.
e) A Nigerian oil company buys insurance from a British insurance company to
insure its oil rigs in the Niger Delta
Externalities and public goods are examples of market failures. Explain why these are market failures. Also, provide two ideas to help solve each of these two market failures and why/how your ideas will work.
explain why accountants in the public sector are often paid less than those in the private sector
