Search & Filtering
B) what is the mariginal rate of subsitutuion between two complementary goods ?
you were planning to spend saturday working at your part-time job but a friend asks you to go skiing
1. Explain how the following changes in aggregate demand or short-run aggregate supply, other things held unchanged, are likely to affect the level of total output and the price level in the short run. a. An increase in aggregate demand b. A decrease in aggregate demand c. An increase in short-run aggregate supply d. A reduction in short-run aggregate supply 2. Explain why a change in one component of aggregate demand will cause the aggregate demand curve to shift by a multiple of the initial change. 3. Use the model of aggregate demand and short-run aggregate supply to explain how each of the following would affect real GDP and the price level in the short run. a. An increase in government purchases b. A reduction in nominal wages c. A major improvement in technology d. A reduction in net exports
Demand and supply function in amarket are described by the equations
a) find the equilibrium prices and quantities (P,EQ & EQa)
b) show your answer using by graph
Lisa Company's required rate of return is 14%. The company is considering the purchase of a new machine that will save RM10,000 per year in cash operating costs. The machine will cost RM40,000 and will have an eight-year useful life with zero salvage value.
explain the meaning of cost of capital and its relevance in a net present value (NPV) analysis.
Lisa Company's required rate of return is 14%. The company is considering the purchase of a new machine that will save RM10,000 per year in cash operating costs. The machine will cost RM40,000 and will have an eight-year useful life with zero salvage value.
i. Compute the machine's internal rate of return to the nearest whole percent. Would you recommend purchase of the machine? Explain.
ii. The company would like to use NPV to evaluate the project now. Compute the machine's NPV, assuming cost of capital is 10%. Would you recommend purchase of the machine? Explain.
Discuss the implications for project investment priority based on your answer in (i) and (ii).
The supply function for a good can be written as Q = 2P + 10, where Q is the quantity supplied in Kilos and P is the Price in dollars.
The price falls from $15 to $10.
Calculate the price elasticity of supply (PES).
(Ignore income taxes in this problem.) Allen Company's required rate of return is 14%. The company is considering the purchase of a new machine that will save $10,000 per year in cash operating costs. The machine will cost $40,000 and will have an 8-year useful life with zero salvage value. Straight-line depreciation will be used.
Explain at least 3 points the meaning of cost of capital and its relevance in a net present value (NPV) analysis.
A person’s utility function is of the form U(x,y) = 5xy. The prices of good x and y are Px = $4 and Py = $2, respectively. The person’s income is $1200.
(a) Show that these preferences are homothetic?
(b) What quantities of x and y should the consumer purchase to maximize his
utility?
(c) Determine the person’s income offer curve (IOC). Draw it.
(d) Explain whether each of the two goods is normal or inferior.
(e) Derive the Engel curve for x. Draw it.
D. Complete the following table and graph the utility curves for Kali and describe the
slope of her utility curves in the context of her consumption for mangoes. (12 marks)
Eggplants Total Utility Marginal Utility
(TU) (MU)
1 105
2 195
4 300
6 30
8 375
9 4
