Economics Answers

Indicate whether the given statement is true(T) or false(F).

15.In general, the amount of Average Poverty Gap is bigger than the amount of Average Income Shortfall. 

16. Multidimensional Poverty Index(MPI) is computed as the sum of the incidence of multidimensional poverty and its average intensity. 

17. Multidimensional Poverty Index treats nutrition and drinking water with 

equal weight

18. The closer is Normalized Poverty Gap to 1.0, the less severe is the poverty problem.  

19. Case studies and cross-country comparisons of data show that rapid economic growth often bypasses and marginalizes the poor such that it is not compatible with reductions in poverty.

20. Actual international comparison data shows that the range of GDI is greater than that of GII. 

Indicate whether the given statement is true(T) or false(F).

7. With modern sector enlargement growth, inequality is likely to rise first and   then fall. 

8. Unlike Gini coefficient, the coefficient of variation is affected by the unit of measurement. 

9 If the area between the line of perfect income equality and the Lorenz curve 

is A, and the area under the Lorenz curve is B, then the Gini coefficient is A/(A+B). 

10. Eradication of absolute poverty is achievable but it is not possible to eliminate relative poverty. 

11. The higher is Kuznet’s ratio, the lower is the degree of inequality between high-and low-come groups in a country. 

12. Poverty is better studied with size distribution measures than those based on factor distribution.

13. With modern sector enrichment growth, inequality will unambiguously fall. 

14. Absolute poverty line is set based on purchasing power parity method that considers local price level. 

For each of the following cost-output relationships, describe the shape (U-shape,

decreasing, increasing, constant) of the average total cost and marginal cost

functions (C = total cost, Q = output):

(a) C = 42,500,000 + 2550Q

(b) C = 8.48 + 0.65Q + .00220Q2

Indicate whether the given statement is

true(T) or false(F).

1. Eradication of relative poverty is a part of the

SDGs.

2. If one single person had the entire national

income, the value of the Gin coefficient ratio

would be equal to O.

3. The closer is the Lorenz curve to the 45-degree

line, the more equal the distribution of income.

4. The Lorenz curve can never lie above the 45-

degree line.

5. If the government imposed a progressive income

tax, then the value of the

Gini coefficient will become smaller.

6. Kuznet's inverted-U hypothesis states that as

economies develop, the population growth rate

first rises and later falls.

Consider a consumer whose utility function is given as: U (x, y) = xy, where x and y denote the quantities of goods x and y consumed. The budget constraint faced by the consumer is: 4x + 8y = 120, where 4 is the price of good x, 8 is the price of good y and 120 is the income of the consumer.

(a)From the utility function find the expression of the Marginal Rate of Substitution for our consumer. Find the typical equation of an Indifference Curve for our consumer.

b Find the optimal quantities for x and y consumed by the consumer. Show your solution diagrammatically. 

c Following on the answer in b, now assume that the price of good x increases to 8. Find the new quantities consumed by the consumer

dFind the Substitution and Income effects associated with the increase in the price of x. Show your results in a graph. Given your result, would you say that good x is a normal good? What about good y? 

Some small school don't have official majors but people sometimes claim them anyway because they took several courses in a specialized area. is this an acceptable practice

3.If you had been on Yahoo's board, would you have supported keeping Thompson?

4. Why do you suppose Thomson resigned?

a) Calculate the TP, MP Labor , MPCapital APLabor, AAPcapita and the MRTS .

b) Within what ranges do we see increasing returns, decreasing returns and negative returns?

C. Within what range does the DMRTS happens

Labor Capital

10 200

15 500

20 800

30 1200

40 1500

50 1800

60 2000

70 2300

80 2500

90 2800

You have just been hired a consultant to help a firm to decide which of the three option to take to maximize the value of the firm over the next three years. The following table shows year end profits for each option. Interest rate are expected to be stable at 8 percent over the next three years.

Option A:

Year 1 year 2 year 3

$70,000 $80,000 $90,000

Option B:

Year 1 Year 2 year 3

$50,000 $90,000 $100,000

Option C:

Year 1 year 2 year 3

$30,000 $100,000 $115,000

a. Discuss the difference in the profits associated with each option

b. Which option has the greatest present value? Show computation

You are the manager of a fortune 500 hotel chain and must decide where to locate a new hotel. Based on tax considerations,your accounting department suggests that atlantic city is the best choice followed by las vegas. In particular your current year tax savings from locating in atlantic city are $4 million,but they are only $3 million in las vegas. Your marketing department, on the other hand has provided you with sales estimates that suggest that the present value of the gross (of taxes) operating profits from locating in atlantic vity are only $10 million but they are $14 million for las vegas. It will cost $14 million to build the hotel in either location. Ignoring all other considerations, where should you build the hotel? What are your firm's economic profits if you locate the hotel in atlantic city?

If the price of Pak Suzuki company Alto car decreases from Rs 1,700,000 to Rs 1,200,000, keeping other factors constant, it would be termed as movement along the demand curve or shift in the demand curve? Elaborate it graphically?