Economics Answers

The college of business at Kerouac University is planning to begin an online MBA program. The
initial start-up cost for computing equipment, facilities, course development and staff recruitment
and development is $400,000. The college plans to charge tuition of $20,000 per student per year.
However, the university administration will charge the college $10,000 per student for the first 100
students enrolled each year for administrative costs and its share of the tuition payments.
a. How many students does the college need to enroll in the first year to break-even?
b. If the college can enroll 80 students the first year, how much profit will it make?
MAT540 Homework
Week 1
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c. The college believes it can increase tuition to $25,000, but doing so would reduce enrollment to
50. Should the college consider doing this?

Question 3 The minimum wage in year 1 is $1 higher than the equilibrium wage. In year 2, the minimum wage is increased so that it is $2 above the equilibrium wage. We observe that the same number of people is working at the minimum wage in year 2 as in year 1. Does it follow that an increase in the minimum wage does not cause some workers to lose their jobs? Explain your answer.

"Emerging economies, such as china, pose a threat to the comparative advantage of the U.S". How can such a statement be evaluated using the insights learned from the standard trade model? Provide full verbal and graphical explanation.

A company wants to setup a new office in a country where the corporate tax rate is as follows: 15% of first $50,000 profits, 25% of next $25,000, 34% of next $25,000, and 39% of everything over $100,000. Executives estimate that they will have gross revenues of $500,000, total costs of $300,000, $30,000 in allowable tax deductions, and a one-time business start-up credit of $8000. What is taxable income for the first year, and how much should the company expect to pay in taxes?

1. Which of the macroeconomic models is much more suitable than any other to test for whether technological progress has taken place or not?
2. In a computable general equilibrium model, base year price is .............
3. At a given level of capital per head or labour, an improvement in technology will result in ...............
4. Give the three basic uses of macro econometric models.

Given the following information about a closed oil-rich economy which does not impose any tax on its citizens to finance its expenditure, you are required to derive mathematically and explain using graphs the impact of a change in each of the key exogenous variables on the endogenous variables.
Y = C + I + G
C = C(Y), I = I(r), G = Go, Md = L(Y,r)

Parker Company had $5000000 in sales and reported a $300000 loss in its annual report to stockholders.According to a CVP analysis prepared for managements use,$5000000 in sales is the break even point for the company. Did the company's inventory level increase, decrease, or remain unchanged? Explain.

Lets say that you borrow 1200 at 8% annual interest rate, compounded quartly, and plan to pay back the loan and interest together at the end of the third year. The sum to be paid can be determined from:

a. F=1200(F/P,8%,3)
b. F=1200(F/P,2%,3)
C. F=1200(F/P,8%,12)

How much does one have to invest today for a lump-sum payback of 25,000 in five years if the annual interest rate is 12%, compounded monthly?

If your investment grows 2% each month for a whole year, what was the EFFECTIVE annual interest rate?