Economics Answers

Use a four sector keynesian model to describe what effect a reduction in the exogenous components of investment and consumption?

Can you make recommendation about the proposals on the basis of GDP deflators?

One of the key features of the global economy is that wages of skilled workers have risen relative to unskilled workers in both industrialised and developing economies. Explain why and how this empirical phenomenon is better explained by the Foreign Outsourcing model than by the Heckscher-Ohlin model

Compare industries under monopolistic competition with those in pure competition

Draw a set of indifference curves for the following pairs of goods and briefly explain each answer.

a) Hamburgers and carrots for a vegetarian who neither likes nor dislikes meat. (Vegetarians do not eat meat.)

b) Peanut butter and jelly for an individual who will not eat peanut butter sandwiches or jelly sandwiches, but loves peanut butter and jelly sandwiches made with two parts peanut butter and one part jelly.

Explain what we mean by Marginal Rate of Substitution (MRS). Using this concept, explain why market basket A, which is not tangent to the budget line, is not utility maximizing, while market basket B, which runs tangent to the budget line, is utility maximizing

Forey, Inc., competes against many other firms in a industry. Over the last decade, several firms have entered this industry and, as consequences, Forey is earning a return on investment that roughly equals the interest rates. Furthermore, the four-firm concentration ratio and Herfindahl Hirschman index are both quite small. Based on this information, which market structure best characterizes the industry in which Forey competes? Explain the characteristics this market structure and what happens to the Forey Inc’s profit in the short-run and long-run.

4. Given the following demand and supply functions:
QDX = 1600 - 3PX + 0.4PY - 0.3PZ + 0.003I
QSX = 500 + 15PX - 2W - 0.3R
Where: PY = $160; PZ = $55; I = $4850; W = $11; R=$145

a) What is the equilibrium price?
b) What is the equilibrium quantity?
c) Calculate the point price elasticity of demand, at the equilibrium values (using the equilibrium price and equilibrium quantity in part (a). Show your calculation.
d) Find the point income elasticity of demand. Interpret your result.

The MRTS for isoquants in a fixed-proportion production function is?

a. zero or one.
b. always zero.
c. always one.
d. zero or undefined.

Swagat Manufacturing Sdn. Bhd. needed to determine if it would be cheaper to make 10,000 units of a component in-house or to purchase them from an outside supplier for $4.75 each.
Cost information on internal production includes the following:
Total Cost Unit Cost
$ $

Direct materials 10,000 1.00
Direct labour 20,000 2.00
Variable overheads 8,000 0.80
Fixed overheads 44,000 4.40
Total 82,000 8.20
Fixed overhead will continue whether the component is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price.
Required:
b. Which alternative is more cost effective and by how much?
c. Now assume that the fixed overhead includes $10,000 of cost that can be avoided if the component is purchased externally. Which alternative is more cost effective and by how much?