Two business sell an identical product for P=20.

Business 1 uses a process with a cost curve of TC = 10000 + x.

Business 2 uses a process with a cost curve of TC = 2000 + 2x.

Which business is likely to have a higher DOL?

Select one:

a. Business 1, because it has a higher contribution margin and higher fixed costs

b. Business 1, because it has a lower contribution margin and lower fixed costs

c. Business 2, because it has a higher contribution margin and higher fixed costs

d. Business 2, because it has a lower contribution margin and lower fixed costs

Fill in the blanks to make the following statements correct.

a. In the long​ run, total output is determined only by ▼ (potential output or actual output). In the long​ run, aggregate demand determines the ▼ (price level or output level).

b. Permanent increases in real GDP are possible only if ▼ (potential output or actual output) is increasing.

c. Suppose illiteracy in Canada were​ eliminated, and the school dropout rate was reduced to zero. The effect would be a permanent▼(decrease or increase) in productivity and ▼ (a decrease or an increase) in potential output.

d. A reduction in corporate income tax is likely to make▼ (net exports or investment or consumption) more attractive and thus shift the ▼(aggregate supply or aggregate demand) curve to the right. The result is ▼(an increase or a decrease) in the​ short-run level of real GDP. In the long​ run, the greater rate of ▼ (net exports or consumption or investment) by firms will lead to a greater level of ▼(potential GDP or actual GDP).

2. Why is cost-minimization analysis most likely to be useful for managers? ( NO PLAGIARISM PLEASE , 200 WORDS ESSAY )

Why have economic analyses of clinical and administrative innovations become more important? ( NO PLAGIARISM PLEASE ; 150 WORDS ESSAY PLEASE)

2. Assume that Susan deposits $3000 of cash into bank A and the reserve requirement is 10%.

a. Complete a simple T-account for bank A showing this deposit and asume that bank A lends out its excess reserves to Bill.

b. Bill uses the entire loan to buy groceries at Rouses Supermarket and Rouses deposits it in bank B. Suppose bank B lends out all its excess reserves to Maria, and her loan ends up in bank C. Fill in the T-accounts for bank B and bank C.

c. Assuming that this chain reaction continues to happen until the money is exhausted, how much total deposits would have been created from Susan’s initial deposit?

Utilizing the market for reserves and assuming that initially the federal funds rate is 0.5 percentage point below the discount rate but 0.5 percentage point above the interest rate paid on reserves,

a. Show what would happen to the federal funds rate if the FED decreased the discount rate by 0.3 percent

b. Show what would happen to the federal funds rate if the FED increased the interest rate paid on reserves by 0.75 percent

Suppose that, in the market for litres petrol, demand is given by P = 5 – 0.3Q, and supply is given by P = 1 + 0.1Q.

Further, suppose that the government provides a $1 per litre subsidy for petrol.

A. Calculate the effect of the subsidy on the equilibrium price and quantity.

B. Calculate the change in producer surplus and consumer surplus that result from the provision of the subsidy.

C. Does total surplus to everyone in the economy increase or decrease as a result of the subsidy? Explain why and calculate the amount of the change.

Section 2 Business Application in the EU

4. Discuss the positive and negative effects on consumer markets of EU market Competition Policy. Please use examples to support your response.

5. B+C Motorcycles are based in the UK looking to enter the European markets for the first time. Advise the company on the research information and methods that they should undertake in order to establish which country target market is most attractive to them.

6. Discuss the impact of robots on the millennial worker and the repercussions on EU Migration.

1. There are two firms, A and B producing differentiated products. Their demand curves are:

_{qA=100-2PA+3PB}

_{qB=120-2PB+2PA}

and both have MC=5. Note that demand curves are not symmetric. Assuming that firms are engaged in Bertrand price competition:

(a)Write down the profit function of firm A and find its price response function

Hint:
_{πA=(PA-5)(100-2PA+3PB)}

(b) Write down the profit function of firm B and find its price response function

(c) Find equilibrium prices P_A and P_B; equilibrium quantities q_A and q_B; and profits for firms A and B.

Your firm has a contract to purchase 1000 laptops from a Taiwanese company. The payment is due on receipt of the shipment and must be delivered in Taiwan on June 31, 2020. In March 2020, when you are arranging the contract, the laptops are each priced at 20,000 NT$ (New Taiwan Dollar). The spot rate in March 2020 is $1 in exchange for 30 NT$.

a) [5 points] What is the U.S. dollar price of one unit of laptop in March 2020?

b) [5 points] What will be the total USD price of the laptops when payment is due in June if the exchange rate does not change between March and June?

c) [10 points] What will be the total USD price of the laptops when payment is due in June if the USD depreciates against NT$ by 10% between March and June?

Analyse the effects of a payroll tax given per unit of labour. Specifically, analyse its impact on total employment, the real wage and total wage earnings.

Section 1 European Policy

1. EU Competition policy is out to ensure no organisation has unfair advantage over another. Cite the economic rationale behind this and discuss the benefits of free trade competition.

2. Increased tension in the Middle East is resulting in military aggression. What role, if any, should the EU play? Critically discuss both positive and negative aspects of an EU response.

3. How has the advent of the Single European Market affected the process of European Integration?

a. Use a diagram to explain the process by which a sudden decrease in households’ wealth because of a decline in the stock market will, in the short run, move the economy from one long-run macroeconomic equilibrium to another. Illustrate your answer with a diagram. b. Assuming you have elected a liberal government, how would your public policymakers fix this economy? c. Would the actions you describe in your answers to question (b) cause crowding out? Explain.

3. (a) Below is an extract from the Skills Development Levy Act No. 46 of 2016: “An Act to provide for the imposition, payment and collection of a skills development levy at the rate of 0.5 percent of gross emoluments; and to provide for matters connected with, or incidental to, the foregoing…” The levy is payable by employers. The levy will be collected by the Zambia Revenue Authority (ZRA) and paid into the Technical Education Vocational and Entrepreneurship Training Authority (TEVETA) Fund. Using an appropriate economic model, analyse the likely long-run effects of this Act on skills development, real wages and employment levels.

1. The Covid-19 pandemic has disrupted labour markets in ways not seen since the Great Depression. Businesses have had to come up with measures to mitigate against the adverse effects of the pandemic. These include rearranging work arrangements (work-from-home), forced leave, rotational work schedules, etc. Naturally, one would argue that level of unemployment has increased, at least in the short-term. You are the senior labour economist at the Ministry of Labour in Zambia. Write a one-page policy brief outlining a set of practical policy prescriptions to arrest the rising unemployment levels.

[Hint: Use a standard policy brief template]