What is included in calculating Investment spending?

explain why it is for a seller to know the price elasticity of demand and describe three important determinants of price elasticity/

Describe and illustrate the derivation of the optimal choice of health status, health care, and the composite “all other consumption” commodity in the Wagstaff model of the demand for health care.1 Analyse the impact of an increase in the price of health care on the optimal choice of health status, health care, and the composite “all other consumption” commodity in the Wagstaff model.

“To understand what causes the business cycle, leading variables alone are of interest. Coincident and lagging variables merely display the consequences of changes in the economy.”

Do you agree with the statement above? Explain.

Ted describes his preferences over combinations of hamburgers and glasses of scotch as follows. “I like both hamburgers and scotch up to a point, but after that point further consumption of either of them makes me feel increasingly ill.” Draw a family of representative indierence curves that illustrate Ted’s preferences. Indicate the direction(s) of increasing satisfaction for Ted in your diagram. Are Ted’s preferences locally non-satiated? You should include a brief explanation that provides a justification for each of your answers.

Research and provide examples or comparisons that demonstrate these changes over time from each of the categories: Print, Radio/Music, Cinema, Television, and the Internet. Include images of each artifact.

How have these various forms of communication have evolved since they were first introduced? (Give a “before” and “after”)

In 300-500 words, give your opinion: Will pop culture ever stop using a form of media? Why or why not?

Question 3

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A firm shuts down if price is

Select one:

below minimum average variable cost.

above minimum average fixed cost.

below average total cost.

less than marginal cost.

above minimum average variable cost.

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A perfectly competitive firm's supply curve includes its marginal cost curve at all prices above minimum

Select one:

average variable cost.

average fixed cost.

total variable cost.

total cost

average total cost.

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A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve.

Select one:

marginal cost; average variable cost

marginal cost; marginal revenue

total cost; total revenue

marginal cost; average total cost

average total cost; average variable cost

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GM will temporarily lay off 1,300 employees as the company stops production of the electric car, Chevy Volt, for five weeks. GM had hoped to sell 10,000 Volts last year, but ended up selling just 7,671. It plans to maintain inventory levels by adjusting production to match demand.

Source: Politico, March 2, 2012

The shutdown decision ________ total fixed cost and ________ total variable cost.

Select one:

does not change; does not change

does not change; increases

does not change; decreases

increases; does not change

decreases; decreases

Question 7

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In the short run, a firm in a perfectly competitive market

Select one:

chooses the price that maximizes its economic profit.

chooses the price that minimizes its marginal cost.

always makes an economic profit.

can make an economic profit, incur an economic loss, or break even.

shuts down if it incurs an economic loss.

Question 8

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Franklin is a fiddlehead farmer. He sold 10 bags of fiddleheads last month, with total fixed cost of $100 and total variable cost of $50.

Suppose the price of fiddleheads is expected to stay at $10 per bag for the foreseeable future, and Franklin's production and cost figures are expected to stay the same. His total fixed cost consists entirely of rent on land, and his five-year lease on the land runs out at the end of the month. Should Franklin renew the lease?

Select one:

Insufficient information to answer.

No, because in the long run, zero economic profit is a signal to move factors of production out of fiddlehead farming.

Yes, because total revenue will still cover total fixed cost.

Yes, because total revenue will still cover total variable cost and a portion of total fixed cost.

No, because total revenue must cover all costs for factors of production to remain in fiddlehead farming in the long run.

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If firms exit an market, the

Select one:

price of the good falls.

total market output increases.

economic profit of the remaining firms stay the same.

economic profit of the remaining firms decrease.

market supply curve shifts leftward.

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If firms in a perfectly competitive market are making an economic profit, new firms will enter. This entry shifts the market

Select one:

demand curve leftward, and the market price falls.

supply curve rightward, and the market price falls

demand curve rightward, and the market price rises.

supply curve leftward, and the market price rises.

2.1 Defend the reason for the following, using elasticity of demand as the basis for your answer. Motivate your answer with the aid of examples.

2.1.1 Narrowly defined markets tend to be associated with a more price elastic demand than broadly defined markets. (6)

2.1.2 Goods tend to have more price elastic demand over large time horizons. (6)

2.1.3 Necessities tend to have relatively inelastic demands, whereas luxuries have relatively inelastic demand. (6)

2.2 Read the scenario below and answer the question that follows: George Richard is a farmer who is also a skilled metal worker. He makes unique garden sculptors that could earn him R400 per hour. One day he spent 10 hours planting R5 000 worth of seeds on his farm.

2.2.1 Measure George’s opportunity cost. (4) 2.2.2 Determine the cost that is measured by his accountant. (4)

2.2.3 If the seeds George planted yield R10 000 worth of crops, argue the point that George does earn an accounting profit. (4)

2.2.4 Would you advise George to continue as a farmer or switch to metal work?

According to efficiency wage theory, higher wages paid by firms DO NOT lead to

1)structural unemployment

2)wages above their equilibrium

3)lower firm profits

4)increased worker productivity

The United States prides itself on being an “immigration nation.” Yet throughout history, a succession of different immigrant groups has faced antagonism: Chinese, Irish, Italians, Japanese, Germans, and Jews. Now Mexicans and Muslims face hostility. Why does this happen? What can be done about it?

1. A low value of opportunity cost of a resource reflects its scarcity.

1. True
2. False

2. Which of the following is an example of a macroeconomic question?

1. How will a consumer react if their income decreases?
2. What would be the likely impact of an increase in business taxes on the overall level of inflation in the country?
3. How many smartphones should Samsung produce this quarter?
4. Who are the winners and losers from the imposition of a tax on cigarettes?
5. What is the optimal number of workers for an ice cream shop to employ during the summer months?

3. Which of the following best describes the idea of the fundamental economic problem?

1. Lack of demand for limited resources
2. Unlimited resources and unlimited wants
3. Infinite resources and limited wants
4. Limited resources and unlimited wants
5. Limited wants and limited resources

4. Two countries with identical resources can each make the same two goods: cars and computers. Which of the following best describes the idea of absolute advantage for these two countries?

1. One country has higher opportunity costs of one good, and the other country has higher opportunity costs of the other good.
2. One country is able to produce more of a good or service than another country given the same resources.
3. Both countries have identical opportunity costs.
4. One country has a lower opportunity cost of one good, and another country has a lower opportunity cost of a different good.
5. One country is able to produce less of a good or service than another country.

5. Assume that the typical household in Country X will spend 80% of any additional increase in income. How much will real GDP change as a result of a $4 billion increase in investment in this country?

1. Real GDP decreases by $4 billion
2. Real GDP increases by $20 billion
3. Real GDP increases by $4 billion
4. Real GDP increases by $5 billion
5. Real GDP decreases by $16 billion

6. Which of the following best describes why we cannot always compare living standards between countries using real GDP per capita?

1. It might not represent living conditions of the typical household
2. It doesn't consider that there might be population differences between countries
3. It might overstate living standards if there are a lot of non-market transactions
4. It doesn't include government spending on social programs
5. It includes externalities like pollution

7. According to the circular flow model, how is the GDP of a nation determined?

1. By adding the total income of households to the total expenditures by households and the total revenues of firms
2. By adding the total income of households to the total revenues of firms
3. By adding the total expenditures of households to the total income of households
4. By determining either total household income, total household expenditures, or the total revenues of all the firms in the nation
5. By adding the total revenues of firms to the total expenditures of households

8. Which of the following best describes a market in equilibrium?

1. At the current price, quantity supplied is less than quantity demanded.
2. At the current quantity, the price sellers charge is more than what buyers are willing to pay.
3. At the current price, quantity supplied is greater than quantity demanded.
4. At the current price, quantity supplied equals quantity demanded.
5. At the current quantity, buyers are willing to pay more than sellers receive.

9. Which of the following best describes what happens in the long run when a firm anticipates that the price of their good will always be less than average total cost (ATC)?

1. The firm will shut down.
2. The firm will produce as long as price is greater than average variable cost.
3. The firm will exit the industry.
4. The firm will enter the industry.
5. The firm will produce as long as price is less than average variable cost.

10. The Alibaba Company produces widgets. Its average variable cost at its current output level is $35 per unit. Its current average total cost per unit is $60. If the market price is $30:

1. it should focus to minimize marginal cost
2. it should stay in business in the short-run
3. it should shut-down immediately
4. none is correct
5. it should stay in business in the long-run

QUESTION THREE [15]

3.1 Questions 3.1 to 3.2 is based on the excerpt below. Shine is one of many firms in the market for toothpaste which is in short-run equilibrium. It engages in advertising to create the perception of a unique product. Discuss the long-run aggregate supply curve.

3.1.1 Draw a diagram illustrating Shine’s demand curve, marginal revenue curve, average total cost curve and marginal cost curve, clearly labeling the company’s profit maximizing output, price and equilibrium position. Include in your answer how the profit position is determined. (10)

3.1.2 Determine why Shine is able to establish this profit position in the short-run, using the characteristics of the market structure this firm falls within as the basis for your answer.

QUESTION FOUR [20]

4.1 Examine which phase of the business cycle is linked to a contraction in gross domestic product. Use a diagram to motivate your answer. (9)

4.2 Three consecutive contractions in gross domestic product implies the onset of recession for an economy. Compile a fiscal policy to take an economy out of this undesirable situation. (11)

please answer the following:

14- An infinite life project with initial cost of $35,250 and a maintenance cost of $12,260 starting at year x and repeating every x years. If interest rate = 6% and x=6, find the capitalized cost CC.

15-Find the future worth FW of an annual amount of $3,226 increasing every year by $660 for 10 years, interest rate = 11%.

16-Starting at year 1, an amount of $4,026 is deposited in an account of 3% interest every year for 7 years. Find the value of the present worth PW at year 0.

17- A deposit of $9,750 is made at year 4, find the value of the future worth FW at year 10 , interest=7%.