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Explain with a diagram how a decrease in human capital can lead to detrimental results for economic growth (holding physical capital and technological progress constant)?
Neha and Sonam consume only Coke and Pepsi in a two person and two goods exchange economy. Nehaconsumes these two goods in fixed proportions such that she consumes 2 bottles of coke with 1 bottle of Pepsi.Sonam's utility function is given by U = 4P + 3C . In the economy, there is a total of 100 bottles of Pepsi and 200bottles of Coke. If Neha initially had 60 bottles of Pepsi and 80 bottles of coke, then in the equilibrium position,Sonam will consume:
2. At the cose of the year a company has mventory ot S 150,000 and cost of goods solkd tor
$ 975,000. If the company's turnover ratio SS, detemine the opening balance of the mventory
An individual consumes goods ₁ and 2. Let w be the wealth of individual and p₁> 0 and p2 > 0 be the prices of the goods. For each of the following utility functions provide a real life example of two goods ₁ and 22 that satisfy them, draw the indifference curves, determine whether preferences are convex, strictly convex or neither, and compute the Walrasian demand, indirect utility function, Hicksian demand and expenditure function:
a. U(x1, x₂) min{2x1, x2} =
b. U(1,2)= max{2x1,2}
c. U(x1, x2) = 2x₁ + x₂
d. U(x1, x2) = x²x₂
The Specific Factors Model (Lecture 3)
We examined a trade liberalization shock for the specific factors model during the lecture. Now instead consider the following shocks for a closed economy (to simplify the analysis, let's assume that Pc and PF are fixed and do not respond to the shocks):
(a) An exogenous increase in the labour specific to the sector producing food (LF). How does it affect the equilibrium outcomes (wages, rental rate of capital, the allocation of capital across sectors)? Who are the winners and losers from this shock?
(b) How about an exogenous increase in the total amount of the mobile factor K? Who are the winners and losers?
(Hint: How does each shock affect the figure we use to analyse the equilibrium?)
Shalimar Foods sells Vegetarian Corn Samosa plates for INR 30 each, and serves an average of 625
customers per week. During a recent promotion on the eve of India’s Independence Day
, Shalimarcut its price to INR 25 each and observed an increase in sales to 750 plates per week.a.
Calculate Shalimar’s price elasticity of Demand
b.
Shalimar is considering permanently lowering its price to INR 28 to increase revenue. Explainc.
How many plates should Shalimar expect to sell at the new price?d.
Does the move make sense in the light of Shalimar’s intent to increase revenue?
Real money demand is
It) = 02Y – 5001
Where Y is real income and i is the nominal interest rate.
The economy has a fixed real output Y= 1,000.
Assume further that the central bank maintains a constant money growth rate to have a constant inflation rate and a fixed real interest rate of r= 0.04
1. Draw the graph with real seigniorage revenue on the vertical axis and inflation on the horizontal axis. Show the values of seigniorage for inflation rates of 0; 0.04; 0.18 and 0.3 in the graph.
2. Solve for the inflation rate that maximizes seigniorage revenue. What is the maximum
amount of seigniorage revenue? 3. Repeat part 1 and 2 for Y 1,000 but r= 0.08
What is Indifference Curve, explain with the help of diagram and also explain its
properties
Good X is a normal good if an increase in income leads to
a. an increase in the demand for good X.
b. a decrease in the supply for good X.
c. an increase in the supply for good X.
d. a decrease in the demand for good X.
The own-price elasticity of demand for apples is −1.2. If the price of apples falls by 5 per cent, what will happen to the quantity of apples demanded?
a. It will increase 6 per cent.
b.It will increase 4.2 per cent.
c.It will increase 5 per cent.
d.It will fall 3.8 per cent.
