Economics Answers

Suppose wages and prices are flexible, people form their expectations rationally, and they anticipate policy incorrectly. What happens?

Suggest solutions to the three major weaknesses of the New Classical Theory.

With the help of the Solow growth model diagram, explain the

effects of shocks on steady state per worker capital and output.

Indian Airlines have a capacity to carry a maximum of 10.000 passengers per month from

Calcutta to Guhawati at a fare of Rs. 500. Variable costs are Rs. 100 per passenger and fixed

costs are Rs. 30,000 per month. How many passengers should be carried per month to break

even

Brief explanation of international trade

Explain global economy and politics

1) Suppose that the elasticity of supply for wheat is 0.3 and for magazines is 1.3.

a. If the price of wheat rises 10%, what is the increase in quantity of wheat supplied?

b. If the price of of a magazine rises 10%, what is the increase in quantity of magazine supplied?

c. Which good does the quantity supplied respon more strongly, wheat or magazines?

1) New cars are normal good and people’s incomes increase. Simultaneously, auto manufacturers must pay more for their worker’s health insurance. What is the effect on price and quantity of new cars?

2) The table below gives a supply schedule.

Point | Price (RM) | Quantity Supplied

A 5 10

B 15 30

C 25 50

D 35 90

a. Using the midpoint method, calculate the price elasticity of supply between points A and B; between B and C and between C and D.

b. Why is the elacticity of supply always positive?

c. Why does the elasticity of supply increase in value as more time passers after a price hike?

1. Define economics, distiguish between microeconomics and macroeconomics and explain the basic economics problems.
2. Ditinguish between changes in quantity demanded and changes in demand.
3. How is a shortage different from a surplus?
4. People read that drinking orange juice helps prevent heart disease. What is the effect on the equilibrium price and quantity of orange juice?
5. The cost of memory chips used in computers falls. What is the effect on the equilibrium price and quantity of computers?
6. You are told that a 10% increase in the price of a good has led to a 1% increase in the quantity supplied of the good after one month. Use the information to answer the following questions?

a. How you decribe the supply of this good?

b. Calculate the price elasticity of supply.

c. If after one year, the quantity supplied has inceased by 25%, calculate the new elasticity of supply.

In 2011 the Egyptian Government increased the top rate of income tax. What is likely to have been the main aim of this policy measure?

A   a reallocation of resources from producing necessities to producing luxury products

B   a redistribution of income from the rich to the poor

C   a reduction in the deficit on the current account of the balance of payments

D   a reduction in the level of cost-push inflation