Economics Answers

During the Revolutionary War, the American colonies

could not raise enough tax revenue to fully fund the

war effort. To make up the difference, the colonies

decided to print more money. Printing money to cover

expenditures is sometimes referred to as an “inflation

tax.” Who do you think is being “taxed” when more

money is printed? Why?

To

Explain the following terms and give example for each when necessary

1)               GDP AND GNP

2)               Approaches of measuring GDP

3)               Unemployment and its type

4)               Inflation and its type

5)               Fiscal policy and tools

6)               Monetary policy and tools

7)               Objectives of Macroeconomic policies

1.         A tour operating firm plans to take tourists between Addis Ababa and Jimma. its estimated cost function given by C =100 +50 N+4N² (Where N denotes the number of passengers per day)

       A. State the average cost function.

       B. State the marginal cost of the average cost function.

       C. Find the number of passengers per day that minimize average cost.

       D. What is the minimum average cost at the optimal level of passenger?

       E. What will be the total cost at the optimal level?

Suppose that William Berl, the manager of the Oldsmobile division of the General motors Corporation, has estimated the following regression equation for Oldsmobile

Q₀ = 90,000 – 200P₀ + 3,000N + 100I +50P_C – 2,000P_g + 5A

Where Q₀ = Quantity demand of Oldsmobiles per year

P₀ = price of Oldsmobiles, in dollars

N = population of the United States, in millions

I = per capita disposable income, in dollars

P_C = price of Chevrolet automobiles, in dollars

P_g= real price of gasoline, in cents per gallon

A = advertising expenditures by Oldsmobile, in dollars per year

a)   Indicate the change in the number of Oldsmobiles purchased per year (Q₀) for each unit change in the independent, or explanatory, variables.

b)   Find the value of Q₀ if the average value of P_C = $10,000, N = 220 million, I = $12,000, P0 = $9,000, P_g = 100c, and A = $200,000.

c)   Derive the equation for the demand curve for Oldsmobiles, and

d)   Plot it

Suppose that the demand and supply for milk for Furi dairy farm is given by

where the quantity is in liters and the price is in birr per liter. Assume there is no import or export of milk.

A) Find the market equilibrium quantity, and the equilibrium price.

B) Find the consumer and producer surplus at the market equilibrium that you found in part (a).

C) Assume now that there is a price floor of 36 birr per liter. What is the new quantity sold in the market?

Discuss the quantity theory of money introduced by fisher

4. Price discrimination requires the ability to sort customers and the ability to prevent arbitrage. Explain how the following can function as price discrimination  schemes and discuss both sorting and arbitrage:  

4.1 Requiring airline travelers to spend at least one Saturday night away from home to qualify for a low fare. (3)

 4.2 Insisting on delivering cement to buyers and basing prices on buyers’  locations. (3) 

4.3 Selling food processors along with coupons that can be sent to the manufacturer for a $10 rebate. (3) 

4.4Offering temporary price cuts on bathroom tissue.Charging high-income patients more than low-income patients for plastic surgery. (3) 

A Limited supply of a product remains available

Given the following information answer each of the following questions: - Ca=20 c=MPC=3⁄4 Ia =I=20

If the consumption function of a given individual is given C= 44+0.86Yd and the individual’s disposable income for a specific period was birr 3600,