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Balance sheet and PL account of JB sons company Ltd as on December 31, 20x3
and 20x4 are as follows. Prepare a statement of sources and uses of funds.
[10 marks]
Balance Sheet as on 31 December
Liabilities 20x3 20x4 Assets 20x3 20x4
Accounts Payable
Cash Credit
Outstanding
Expenses
Long term Loan
Capital
Surpluxs
15,000
13,000
2,000
30,000
30,000
10,000
25,000
10,000
3,000
20,000
30,000
12,000
Cash balance
Accounts
Receivable
Loan and advance
Inventories
Fixed assets (net)
5,000
10,000
5,000
20,000
60,000
2,000
8,000
------
25,000
65,000
1,00,000 1,00,000 1,00,000 1,00,000
Profit and Loss Account for the year 20x4 (Rs.)
Sales
Less: Cost of goods sold (including depreciation of Rs.10,000)
Gross Profit
Less: Ollier Expenses
Income before tax
Less: Income – tax Provision
Income aftie tax
2,00,000
1,70,000
30,000
20,000
10,000
5,000
5,000
and 20x4 are as follows. Prepare a statement of sources and uses of funds.
[10 marks]
Balance Sheet as on 31 December
Liabilities 20x3 20x4 Assets 20x3 20x4
Accounts Payable
Cash Credit
Outstanding
Expenses
Long term Loan
Capital
Surpluxs
15,000
13,000
2,000
30,000
30,000
10,000
25,000
10,000
3,000
20,000
30,000
12,000
Cash balance
Accounts
Receivable
Loan and advance
Inventories
Fixed assets (net)
5,000
10,000
5,000
20,000
60,000
2,000
8,000
------
25,000
65,000
1,00,000 1,00,000 1,00,000 1,00,000
Profit and Loss Account for the year 20x4 (Rs.)
Sales
Less: Cost of goods sold (including depreciation of Rs.10,000)
Gross Profit
Less: Ollier Expenses
Income before tax
Less: Income – tax Provision
Income aftie tax
2,00,000
1,70,000
30,000
20,000
10,000
5,000
5,000
A purely competitive wheat farmer can sell any wheat he grows for $20 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.
Ben Laden Rugs, Inc., sells hand-made cotton rugs to tourists at a price of $50. Of this amount, $40 is profit contribution. Ben Laden is considering an attempt to differentiate his product from several other competitors by using high quality natural herb dyes. Doing so would increase Ben Laden’s unit cost by $15 per rug. Current annual profits are $35,000 on 1,000 rug sales.
A. Assuming average variable costs are constant at all output levels, what is Ben
Laden’s total cost function before the proposed change?
B. What will the total cost function be if high quality natural herb dyes are used?
C. Assume rug prices remain stable at $50. What percentage increase in sales would
be necessary to maintain current profit levels?
A. Assuming average variable costs are constant at all output levels, what is Ben
Laden’s total cost function before the proposed change?
B. What will the total cost function be if high quality natural herb dyes are used?
C. Assume rug prices remain stable at $50. What percentage increase in sales would
be necessary to maintain current profit levels?
The cost function for a firm is given by
C(Q)=5+Q2
The firm sells output in a perfectly competitive market, and other firms in the industry sell output at a price of $40.
a) What price should the manager of this firm put on its product?
b) What level of output should be produced to maximize profits?
c) How much profits will be earned?
d) Would you expect the profits to remain in the long run?
C(Q)=5+Q2
The firm sells output in a perfectly competitive market, and other firms in the industry sell output at a price of $40.
a) What price should the manager of this firm put on its product?
b) What level of output should be produced to maximize profits?
c) How much profits will be earned?
d) Would you expect the profits to remain in the long run?
A typical firm in a perfectly competitive market made positive economics profit last period. What do you expect will happen this period to
a. the number of firms in the market
b. the market demand curve
c. the market supply curve
d. market price
e. market output
f. the firm’s output
g. the firm’s profit
a. the number of firms in the market
b. the market demand curve
c. the market supply curve
d. market price
e. market output
f. the firm’s output
g. the firm’s profit
Q2) Ali’s budget line relating good X and good Y has intercept of 20 unit of good X and 30 units of good Y. if the price of good Y is 10, what is Ali’s income? What is the price of good Y? What is then slope of budget line
Using appropriate model, illustrate the effect of an expansionary fiscal policy in an open economy operating in free exchange rate regime .Assume perfect capital mobility. What is the effect if the government uses monetary policy alternatively?
Given a hypothetical economic model of the form:
Y = C + I0 + G0
C = α + β
Where: = Y – T
Y = Income
T = Taxes and that:
Compute the equilibrium level of income and consumption
Y = C + I0 + G0
C = α + β
Where: = Y – T
Y = Income
T = Taxes and that:
Compute the equilibrium level of income and consumption
U.S. Government price supporters for milk led to an increasing surplus of milk. In an effort to reduce the surplus about a decade ago, congress offered to pay diary farmers to slaughter cows. Use two diagrams, one for the milk market and one for the meat market, to illustrate how this policy should have affected the price of meat. ( Assume that meat is sold in an unregulated market)
(a) An open macroeconomic model for a hypothetical economy is represented as follows
Y= C0 +Io+Go+X0-M, M=mo+m1yd,C=co+c1yd, T=tY and Yd=Y-T
Show that equal change in tax and government expenditure are expansionary to the economy
Derive the equilibrium level of savings in the economy above
Derive the investment multiplier
Y= C0 +Io+Go+X0-M, M=mo+m1yd,C=co+c1yd, T=tY and Yd=Y-T
Show that equal change in tax and government expenditure are expansionary to the economy
Derive the equilibrium level of savings in the economy above
Derive the investment multiplier
