Other Economics Answers

2.5. Explain the economic impact of COVID 19 on the South African economy (20)

2.6 Discuss how a cut in the budget of NSFAS would affect students learning in SA (20)

2.7 What is the difference between internationalization and globalization in economics (20)

A small farmer is more likely to operate in a perfectly competitive market than a company like SABMiller because:

A. a small business is more likely to keep close control on costs than a large firm.

B. SABMiller employs many people, whereas perfectly competitive firms are owner- managed.

C. the demand for beer is less elastic than the demand for food.

1. a small farmer supplies a small share of market supply.
2. farming is more risky than beer production.

. The 15th FC was guided by the terms of reference and approach of the previous finacne commission. Explain it.

Computer Company assembles personal computers and sells them in the retail marketplace. The company is organized into two profit centers: the assembly division and the distribution division. The demand curve facing the company (and the distribution division) is P=3,500 – 10Q. The marginal cost for assembly (which includes purchasing the parts) is constant at $450. The distribution division faces constant marginal distribution costs of $50 per unit.

A. What is the profit-maximizing retail price and output for the firm as a whole?

B. If the assembly division has monopoly power to set the transfer price, what transfer price will it select (assuming it knows all the information above)? Calculate the profits for the two divisions in this case.

The President, who was stepping down at the end of his term, was giving a speech on the state of the economy. He said: ‘I have presided over many years of low unemployment and very low inflation but I admit that in the last two years things have not been so stable. On a positive note, unemployment has been even lower than normal but the inflation rate has crept up to 7%. Next year inflation is forecast to be 12%, but that is for the next president to deal with.’ i) What causes inflation in an economy, and what could have caused inflation to increase so dramatically over the past two years? ii) What policy actions should the next president take to combat this rising inflation and how would these work? iii) What desirable macroeconomic goals may have to be sacrificed to deal with the current inflationary situation?

The salary of the highest-paid footballer could buy the services of 1,000 doctors or 2,000 lecturers. This is evidence that A the market economy is highly inefficient. B the market economy is highly efficient. Which of the above (A or B) is true and why?

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)

Problem 1:

A perfectly competitive firm has total revenue and total cost curves given by:

TR = 100Q

TC = 5,000 + 2Q + 0.2Q 2

a. Find the profit-maximizing output for this firm. Show the solution. (5 points)

b. Find the profit the firm makes. Show the solution. (5 points)

Problem 2:

A perfectly competitive firm has the cost function TC=1,000 + 2Q + 0.1Q 2 .

a. What is the marginal cost (MC) of the firm? (3 points)

b. What is the average cost (AC) of the firm? (3 points)

c. What is the lowest price at which this firm can break even? Show the solution. (5 points)

Problem 3:

Market price is $50. The firm’s marginal cost curve is given by MC = 10 + 2Q. Find the profit-

maximizing output for the firm. Show the solution. (5 points)

Problem 4:

What does it mean to say that a perfectly competitive firm is a price taker? Can’t a firm set any

price it chooses? Explain. (5 points)

Directions: Provide your top 3 strategic alliances which you can possibly adopt for your future business.

Use the aggregate demand-aggregate supply model to explain how an expansionary monetary policy can affect output/income