Economics Answers

The following equations describe a certain economy

C=400 + 0.75Yd

I =200 - 100r

T=70 + 0.2Y

G=100

X=10

M=150 + 0.06Y

M =4000

MD= 0.2Y - 10r

Required

Derive the IS and LM equations for three and four sector economies separately.

Calculate the equilibrium Y, C, T, M and I for three and four sector economies separately.

A.   Partner’s G and M have capital account balances of P30,000 and P20,000 respectively. They share profits and losses 3 :1 ratio .

Required Prepare journal entries to record the admission of of P under each of the following condition.

1.   P invested P30,000 for a one fourth interest in the net asset;the total partnership capital after p”s admission will be P80,000.

2.   P invested P30,000 of which P10,000 is a bonus to G and M in conjunction with admission of Padilla , the carrying amount of the inventories is increased by P16,000. Padilla’s capital accounts is credited for P20,000.

Earl E. Bird has decided to start saving for his retirement. Beginning on his twenty-first birthday, Earl plans to invest $2,000 each birthday into a savings investment earning a 3 The Time Value of Money 67 7 percent compound annual rate of interest. He will continue this savings program for a total of 10 years and then stop making payments. But his savings will continue to compound at 7 percent for 35 more years, until Earl retires at age 65. Ivana Waite also plans to invest $2,000 a year, on each birthday, at 7 percent, and will do so for a total of 35 years. However, she will not begin her contributions until her thirty-first birthday. How much will Earl’s and Ivana’s savings programs be worth at the retirement age of 65? Who is better off financially at retirement, and by how much?

24 months calculation

From this equation the expected sales for the next 12 months can be estimated.

Q = 6 200 – 40P + 25PC + 6.2Y + 0.3A + 0.20S

(2.002) (17.5) (6.2) (2.5) (0.09) (0.21) – standard deviation (SEC)

R2 = 0.55 n = 55 F = 4.88

• Q = Quantity sold per month (sales)

• P = Price = R2 900

• PC = Price of leading competitor’s product = R3 200

• Y = Average per capita income in the country = R25 000

• A = Homebase’s monthly advertising expenditure = R20 000

• S = Number of robot vacuum cleaners sold across the country =

7 000

2.1 Calculate the number of iRobot-H vacuum cleaners that H

is expected to sell over the next 12 months.

2.2 Calculate the elasticities for the price of iRobot-H (P), the product of the

leading competitor (PC), average income (Y) and advertising income (A).

2.3 What is the meaning of the variables –40P, +6.2Y and 0.20S?

2.4 What is the meaning of the equation R2= 0.55?

2.5 Determine the t-values for P, PC and Y, and discuss their significance.

Suppose a closed economy is represented by the following information in the short run:

Marginal propensity to save = 0.4

T = 40 + 0.1Y

Md = 200(2 – 4i).

All else equal, if new homes to the value of R100 were constructed in the year 2018, which of the following is correct?

(I) Demand for money would have risen by R100 in 2018.

(II)As a result, equilibrium income increased to approximately R217 in 2018.

(III)If the money supply is R300 the new equilibrium interest rate would have been approximately 32% percent in 2018.

A.Only (II) is correct.

B.Only (III) is correct.

C.(I) and (II) are correct.

D.(I) and (III) are correct.

E.(II) and (III) are correct.

Which point depicts the monopoly equilibrium in the above figure? What will be the

price charged and quantity produced by this monopolist? 2

(ii) What would have been the equilibrium output and price had it been a perfect

competitive industry? Compare your result with that of a monopoly. 2

(b) Why a monopolist does not produce on the inelastic part of its demand curve? 3

(c) A monopolist has cost function TC = 10 + 2Q, where TC is the total cost of producing

Q units of output. Demand in this market is given by theequation Q = 14 – P, where P

stands for the price. Calculate the profit that the monopolist will be making