Economics Answers

Radha is awake for 100 hours in a week. She is earning Rs.1200 per week by working for 60 hours. This year she gets a

scholarship of Rs.500 per week and hercompany also raises her wage to Rs.40 per hour. Analyze the impact of this

change in her income & on her labor supply.

Using the concept of economies and diseconomies of scale, explain the shape of a firm’s long run average

cost curve. How are the short run average cost curvewith the long run average curve?

According to milton frideman," the stability in the demand for money is just a behaivioural fact." Examine this statement with emperical evidence.

For the following cost function TC = a + bQ – cQ2 + dQ3, determine the equations for TFC, TVC, AFC, AVC, AC, MC. (a,b,c,d> 0)

Paul’s lawn- mowing service is a profit maximizing, competitive firm. Paul mows lawns for $27 each. His total cost

each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say aboutPaul’s short-run decision

regarding shutdown and his long-run decision regarding exit?

All Inferior goods are Giffen goods.

Show how the migration of workers from country A to country B will affect the labour supply, labour demandand the equilibrium wage of bothcountries.

A small and open country is described using the following two equations:

Y = C Y – T) + I (r* ) + G – N X(e) -------------------------------1

M/P = L(r*, Y) ------------------------------------------------------------------------------2

a. If the country described above suffers from a recession, should the state government use

monetary or fiscal policy to stimulate employment? Why? (8 Marks)

Use the Mundell-Fleming model to answer the following questions about France.

a) If France suffers from a recession, should the state government use monetary or fiscal policy to stimulate employment?

b) If France prohibited the import of wines from Ukrain , what would happen to income, the exchange rate, and the trade balance? Consider both the short-run impacts

Using the theory of liquidity preference, explain why an increase in the money supply

lowers the interest rate. What does this explanation assume about the price level? (5

marks)