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Explain what is productivity and how productivity is related to the standard of living? (4 marks)
B. Describe the FOUR (4) determinants of labor productivity in a particular country. (8 marks)
C. Explain the causal link between wealth and health. Describe the poverty vicious circle where poor countries are poor because their populations are not healthy, and their populations are not healthy because they are poor (cannot afford adequate healthcare and nutrition). (8 marks)
When saving = Investment, show that the trade balance equals the government spending balance?
how does Fiscal policy through Variation in government expenditure can help to achieve Economic goals
When saving = Investment, show that the trade balance equals the government spendig balance
Eric runs a bicycle repair business and employs a single worker, Vanessa. He charges $6 to repair a flat tire. Vanessa's marginal product is given by 𝑇=1.5−𝐿
100 where 𝐿
L is the number of hours she works in a day and 𝑇
T is the number of additional tires that she repairs.
Suppose Eric currently pays Vanessa $8.25 per hour. How many hours changing tires, per day, should Eric have Vanessa work?
In an exchange economy, there are two people, A and B, and two goods, 𝑥1and 𝑥2. Their respective utility functions and endowments are
𝑢𝐴(𝑥𝐴1,𝑥𝐴2)=min{𝑥𝐴1,2𝑥𝐴2}
𝑢𝐵(𝑥𝐵1,𝑥𝐵2)=𝑥𝐵1+𝑥𝐵2
𝜔𝐴=(9,19)
𝜔𝐵=(9,0)
Note: The As and Bs in the equations above are not powers but rather superscripts to indicate each agent.
The minimum and maximum possible amounts of 𝑥𝐴2 on the contract curve are
Minimum 𝑥𝐴2
Maximum 𝑥𝐴2=
The minimum and maximum possible amounts of 𝑥𝐴1 on the contract curve are
Minimum 𝑥𝐴1=
Maximum 𝑥𝐴1=
The marginal cost of improving water quality in a local community swimming pool is given by a certain equation. MC = 10 + Q. Frank and Brad are the only frequent users of this swimming pool. The equations below represent their MWTP for improved swimming pool water quality.
Frank MWTPT = 25 – 2Q
Brad MWTPE = 10 – 2Q
1. Determine the aggregate MWTP equation for improved swimming pool water quality.
2. Graph the aggregate MWTP and the MC equations in the same diagram.
3. Determine the socially efficient level of water quality.
4. What is the cost of providing the socially efficient level of water quality?
5. How much are Frank and Brad each willing to pay for the socially efficient level of water quality? Is total willingness to pay enough to cover the total cost of maintaining water quality at the socially efficient quality? Suppose total WTP was enough to cover the cost. Is it likely that Frank and Brad could agree to maintain the water quality at this level?
What is the theory of New Keynesian economists
Suppose that the U.S. government reduces the tariff on imported coffee, and a reputable study is published indicating that coffee drinkers have lower rates of colon cancer. How would we expect that this will affect the supply curve and why?
What would we expect to happen to the demand curve and why?
What collective effect will these changes(s) have on the direction of the equilibrium price and quantity?
A north american bond pays semi-annual cooupons of 20$ and matures in 10 years. The current YTM is 5% and the face value is 1000$. What will be the price of this bond in 3 years, if the YTM in 3 years is 100 basis points higher than thw current YTM.
