Economics Answers

Mary borrows $80,000 to buy her home. Beginning next month she will pay the lener $720 per month for the next 20 years. What is the ROR? (Hiint: 20 years = 240 months. Calculate the monthly interest rate first, then multiply by 12 to obtain the annual percentage rate, APR). Express the interest rate as an integer. For example, for 6%, enter 6.

The first cost of a waterjet machine to be used for slicing cheese is $60,000. The machine will generate net annual income of $11,955 during its useful life of 10 years. Determine the rate of return of on investment in this machine. Express the answer as an integer. For example, enter 10 for 10%. (Hint, this problem can be solved from the Compound Interest Factors tables)

For the cashflows, the function for evaluating the ROR is:

(Cashflow)
Year Cashflow
0 -$500
1 0
2 0
3 400
4 -50
5 300

a. -500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0
b. -500 - 50(P/F, i, 2) + 400(P/F, i, 1) + 300 (P/F,i,3) = 0
c. 500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0
d. None of the above

For the following cashflows, the project may have up to?
Year Cashflow
0 -$500
1 0
2 0
3 400
4 -50
5 300

a. one RORs
b. two RORs
c. three RORs
d. Four RORs

Difference between Current transfer and capital transfer .

Since Fall of 2013, the price of oil has shown a steady decline as continued increase of global oil production that has far exceeded the rising demand for oil. Accordingly, many analysts in the energy field have had predicted the likelihood of further decline in oil price in the US market as the US continues to expand its domestic oil production with a long term objective of becoming even net exporter of oil by Y2030. Given that prediction of falling global demand for petroleum oil and rising supply of oil caused significant decline of oil price to come down to as low as $40 per barrel in Aug 2015 from its price of o $90 in Aug 2014. The most recent price of oil has further declined even below $40 per barrel, with a modest rate of volatility.

Finally, explain why sharp decline in oil prices might not necessarily have positive or negative impact on the US equity markets (stock market) even at the current trend of declining but volatile oil prices.

There is a fruit seller who has 30 Kgs of apples to be sold and he wants to fix a price so that all the apples are sold. There are three customers in the market and their individual demand functions are given below:
D1=25-.05P
D2=20-.025P
D3=15-.075P
Where D is the demand and P is the price
Determine :
 Market demand equation for the fruit seller (2.5 marks)
 Price at which he can sell all the apples (2.5 marks)
 Individual demands of each of the three customers (5 marks

If a firm is operating at minimum SRAC, it's also operating at a point on its LRAC curve.
Is this true or false and why.

There is a fruit seller who has 30 Kgs of apples to be sold and he wants to fix a price so that all the apples are sold. There are three customers in the market and their individual demand functions are given below:
D1=25-.05P
D2=20-.025P
D3=15-.075P
Where D is the demand and P is the price
Determine :
 Market demand equation for the fruit seller
 Price at which he can sell all the apples
 Individual demands of each of the three customers

Currently Australian consumers are paying off their debts and not spending. Using the simple Keynesian model to assess the implications for equilibrium GDP and the level of savings of an increase in the savings function