Economics Answers

Explain how each of the following would affect the NHLPA’s bargaining position.

a. Russia’s Kontinental Hockey League signs a large number of NHL stars.
b. A change in the tax laws increases the profitability of owning stock and decreases the profitability of owning a sports franchise.

Global-link Ltd issued a prospectus inviting application for $270 000 ordinary shares of $3.00 each and $270 000 worth of 7% debentures of $90 each.
The ordinary shares were offered at premium at $4.50 each. The debentures were offered at par, payable $90 on application.
Applications were received for 290 000 ordinary shares and 3 100 debentures. All ordinary shares and debentures offered were allotted and excess money was refunded

1. Record the above issue in a journal and General Ledger respectively.

At L=4, k=4, the marginal product of labor is 2 and the marginal product of capital is 3. what is the marginal rate of substitution?

At L=4, K=4, the marginal product of labour is 2 and the marginal product of capital is 3. What is the marginal rate f technical substitution?

explain why monopolies are economically inefficient?

Stock X and Y have the following probability distributions of expected future returns:

Probability ------- X -------- Y
0.15 -10% -20%
0.20 2 0
0.30 10 20
0.20 20 25
0.15 30 40

1)Calculate the expected rate of return for both stocks.
2)Calculate the standard deviation for both stocks.
3)Which stock is risky and why?

A consumer’s utility function is given as U(x,y) = In (x+2y) Where x and y are two goods of consumption. (a) Find the indirect utility function of the consumer. (b) Examine if Roy’s law is satisfied by the consumer’s demand function for y. (c) Find the expenditure function of the consumer e(p,u) where price of x = 1 and price of y = p. (d) Find the Hicksian demand function hy (p,u) for commodity y, where the price of x is 1 and the price of y is p.

An economy comprises two consumers, 1 and 2, with two consumption goods bi-cycles (b) and
wheat. Both consumers have the same utility function μ
Bi-cyclesandwheat
areproducedbytwofirmswhichuseonlylabouraccordingtotheproductionfunctions


b =!l"and #
$!l%
Both firms are owned by consumer 1, and consumer 2 owns 200 units of labour.
(a) Find the production possibility frontier for this economy.
(b) Find the competitive equilibrium.
(c) Find competitive equilibrium if every consumer owns 100 units of labour and owns one
firm.
(d) Find the Pareto efficient allocations for this economy.

Question continued...........

d) As this is perfect competition, new firms may enter the market and compete these profits away. What therefore will ensure that only normal profits are made?

e) The answer to part d) should be the same as the answer to c (4), why?

If we assume that a given bus market is in competition which charges a flat fare of N$1, and if the formula for the total demand (in thousands) in the market is given by the equation:

Qd = 250-60P

Where Qd is the quantity demanded in thousands at a given price P.
If we further assume constant returns to scale, then:

a) What is the total demand at the N$1 flat fare?
b) If the market is shared equally by 4 firms, what is the number of passengers per vehicle carried by each company?
c) If the cost per vehicle kilometer is N$1.60, average utilization 20 passengers per vehicle kilometer and average trip distance 10 kilometers:

i) What is the level of bus kilometers required to service this market?
ii) What profits are being made?
iii) What type of profit is this, normal or abnormal?
iv) What is the cost per passenger carried (as opposed to the cost per vehicle kilometer)?