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The Lewis dual sector model assumes the marginal product of labor is close to zero or equal to zero in the traditional sector. True/False
The Lewis two-sector model assumes high unemployment in the urban sector.True/False
GDP is a stock variable while government debt is a flow variable. True/False
Suppose that the firm operates in a perfect compitative market. The market price of his product is 4. The firm estimate its cost production with the following cost gunction
Tc=50+20q-5q2+p.33q3
What is level of output should be the firm produce to maximize its profit
12. In the current Pakistan's scenario what fiscal policy do you suggest to achieve high economic growth
with price stability? Justify your answer.
Ifesinachi started business on 1/1/99 with the following:
Building N 100,000
Stock of goods N 40,000
Motor van N 50,000
Cash N 10,000
During the month, he undertook the following transaction
5/1/99 Sold goods for cash N 5, 000
10/1/99 Sold goods on credit N 20, 000
12/1/99 Bought goods on credit N 10, 000
15/1/99 Cash sales banked N 15, 000
18/1/99 Paid cash for office stationery N 2, 000
20/1/99 Received cash from debtors for goods N 5, 000
22/1/99 Paid cash for office expenses N 1, 000
23/1/99 Paid salaries by cheque N 4, 000
24/1/99 Sold goods for cash N 7, 000
25/1/99 Sold goods on credit N 5, 000
26/1/99 Bought goods on credit N 3, 000
27/1/99 Bought goods for cash N 2, 500
28/1/99 Withdrew money from bank for owner’s use N 1, 500
29/1/99 Office cash banked N 5, 000
31/1/99 Paid electricity by cheque N1, 500
Required to record the above transactions in the appropriate books of original entry and post them to the ledger.
Justify
1)Merchandise exporters do not typically wish to be in speculative positions, which add an element of
uncertainty to their business.
2)Imbalance in the balance of payments may occur if the exchange rate is fixed, but it will not occur if the rate
is flexible enough to attain its equilibrium level.
The Department of Agriculture of Economica (DAE) administers the floor price of milk at $4 per pound of milk. To support the price of milk at the price floor, the DAE had to buy up the surplus.
Q = 120 – 20P (Market demand)
Q = 20P (Market supply)
ii) Explain floor price and the purpose for the government to implement the policy.
iii) Use the equations to determine the quantity demanded and quantity supplied of milk at
the floor price. Explain the market outcomes of the floor price.
iv) Calculate the consumer surplus and producer surplus in the absence of a price floor.
v) Calculate the consumer surplus and producer surplus with the price floor at $4 per pound of milk.
vi) Use the results in parts (iv) and (v) to explain the impact of floor on the economic welfare of consumers and producers.
vii) Calculate the deadweight loss of floor price policy and explain the result.
viii) How much money does the DAE spend on buying up surplus milk?
Distinguish between growth correlates and fundamental causes of growth
3. Suppose a country targets an income level of Y ∗.
(a) Demonstrate, using graphs, that either fiscal or monetary policies
can be used to achieve the targeted level of income.
(b) What are the possible reasons for a country to opt for a particular
policy (fiscal or monetary) while both of them can yield similar
level of income?
