Economics Answers

3) Draw indifferences curves to represent each of the following type of preferences.

i) A customer is always pleased to change 5 sweet candy for 1 chochlate bar.

ii) A customer always desires 2 glasses to wear with 1 frame.

On Tuesday (Jan 12) the Economist magazine said that the exchange rate between the Canadian Dollar and the Euro was 1.55. On the same day, the Times newspaper said it was 0.65. Which got it wrong?

If the number of employed (E) and the number of unemployed (U) each increase by 10,000 people, what happens to the unemployment rate? Why?

Assume the Consumer Price Index (CPI) rises by 5% and average household income rises by 5%. What happens to the standard of living? Why?

Define the following

1 ) Perfect Competition

2 ) Monopoly

3 ) Monopolistic Competition

4 ) Oil GoPoLY

Project Assignment Question: By taking one company as an example

(preferable the company you work in), develop a five year strategy for the

company you selected. While developing the five year strategy plan for your

selected plan, the strategy plan need to have the three phases of strategic plan

namely Strategy Formulation, Strategy Implementation and Strategy

Evaluation.

(b) How do each of the policy proposals listed in (i) to (iv) affect the appropriability and fertility of research R&D spending in the long run, and output in the long run? i. An international treaty that ensures that each country’s patents are legally protected all over the world. ii. Tax credits for each dollar of R&D spending. iii. A decrease in funding of government-sponsored conferences between universities and corporations. iv.. The elimination of patents on breakthrough drugs, so the drugs can be sold at low cost as soon as they are availabl

Suppose your nominal wage now is €2000. Inflation is 2.5% a year. Your employer is going to raise your wage by 25%. How much will you earn at the end of the year if your employment contract takes into account Inflation?

(Apply the adjusted by Fisher Real interest rate equation in your calculations)

As at 1.6.2012 a customer owed R18,400 for goods sold ten days earlier. Sales made on 7th June was invoiced at R60,000 (excl of VAT), with an offer of 5% cash discount if paid for within a week. R22,325 was received on 11th June. The amount receivable from the customer would be:

R59,050

R49,075

R57,875

R65,075

The following tables show a small firm’s long-run average cost of manufacturing a good at two different plants:

Plant1:

Quantity: 1 2 3 4 5 6 7 8 9

T.C.= 50 106 164 224 287 355 430 520 618

A.C.= ? ? ? ? ? ? ? ? ?

M.C.= ? ? ? ? ? ? ? ? ?

Plant2:

Quantity: 1 2 3 4 5 6 7 8 9

T.C= 20 52 90 130 175 227 285 345 407

A.C = ? ? ? ? ? ? ? ? ?

M.C= ? ? ? ? ? ? ? ? ?

T.C=Total Cost

A.C=Average Cost

M.C=Marginal Cost

c) A new manager is assigned to the production department. He thinks that the firm can profitably move all production to Plant 2 since the average cost of production is lower in Plant 2 than in Plant 1. If the firm only uses Plant 2, how much should it produce in order to maximize profits? Find the firm’s profit. Assume zero fixed cost.