The following passage refers to the operation of a free-market economy. Delete the words (in italics) which are incorrect.

                In a totally free-market economy, the quantities of each type of good that are bought and sold, and the amounts of factors of production (labour, land and capital) that are used, are determined by the decisions of individual households and firms through the interaction of demand and supply.

                In goods markets, households are demanders and firms are suppliers. In labour markets, households are suppliers and firms are demanders.

                Demand and supply are brought into balance by the effects of changes in price. If supply exceeds demand in any market (a surplus), the price will fall. This will lead to a rise in the quantity demanded but a fall in the quantity supplied. If, however, demand exceeds supply in any market (a shortage), the price will rise. This will lead to a fall in the quantity demanded and a rise in the quantity supplied. In either case, the adjustment of price will ensure that demand and supply are brought into equilibrium, with any shortage or surplus being eliminated.

If production of a good increases from 48 to 118, what is the percentage change in the quantity produced? Enter a number rounded to two decimal places. Do not enter a percent (%) sign.

The price of a good is $55. If the price of the good increases by 11% then what is the new price of the good? Enter a number rounded to two decimal places. Do not enter a dollar sign.

Use Excel to answer the following question:

The capital fund for research project investment at a corporation is limited to $100,000 for next year. The company uses an MARR of 15% per year. There are three independent project proposals (i.e., none, one or more can be selected) with pertinent information given in the below table.

(a) Formulate the mutually-exclusive alternatives (i.e., bundles) without calculating any worth. Which of the mutually-exclusive alternatives are feasible? Comment.
(b) Use the Excel built-in function NPV to perform a PW analysis for selection and comment.

Should we keep the penny? The penny, and the nickel, both cost more to mint than their face value. What do you think? Keep the penny? Change its composition? Why or why not?

1. What is the relationship between the federal funds rate and Inflation? 2. if the graph of federal rates is in recession, is the inflation graph in expansion? 3. How about vice versa? Please explain with definitions and examples from the US economy. This can be answered as a paragraph. Thank you.

Use Excel to answer the following question:
Sundance Detective Agency purchased new surveillance equipment with the following estimates. Note: The year index is k = 1, 2, 3, ... to calculate the maintenance costs and extra revenues for the corresponding years.

(a) Prepare a cash-flow (CF) table, do present worth (PW) analysis using an appropriate Excel built-in function to calculate the discounted payback period x with a return of 10% per year.
(b) For a preliminary conclusion, should the equipment be purchased if the actual useful life is 7 years? Comment.

6. Cows are not endangered because

7. Economists assume entrepreneurs are motivated by

8. The things that must be forgone to acquire a good are called

9. An example of an opportunity cost that is also an explicit cost is

10. On a 50-acre farm, a farmer is able to produce 2,000 bushels of wheat when he hires 2 workers. He is able to produce 2,800 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Use the short-run asset approach to predict the effect of a temporary increase in money supply in the U.S. on expected future exchange rate of dollar against euro and spot exchange rate of dollar against euro.  

Explain Transaction Exposure and why this may be a potential foreign exchange risk for an Australian business exporting internationally. Discuss how Leading and Laggingstrategies could be appropriate for managing risk?

Consider the retail market for bananas in Australia in 2020. The market is in equilibrium with 20,000 tonnes being bought and sold per year at a price of $4 per kg.

a. Explain why $5 per kg for bananas is not an equilibrium price. Given the current demand and supply, if the price was temporarily $5 per kg, explain how the market would return to equilibrium.

b. Explain why the production/consumption of 20,000 tonnes of bananas is the socially efficient level of production (assuming there are no externalities).

c. Suppose that in 2021 price of diesel increases, increasing the transportation costs for banana farmers in getting their bananas to market. Explain why there would be any movement in the demand or supply curve and any change in the equilibrium price and quantity for bananas after the increase in the price of diesel.

Question 1

Consider the retail market for bananas in Australia in 2020. The market is in equilibrium with 20,000 tonnes being bought and sold per year at a price of $4 per kg.

Question 21 (5 points)

a. Label the diagram appropriately, by writing the labels i. to vii.

Question 22 (6 points)

b. Explain why $5 per kg for bananas is not an equilibrium price. Given the current demand and supply, if the price was temporarily $5 per kg, explain how the market would return to equilibrium.

Question 23 (4 points)

c. Explain why the production/consumption of 20,000 tonnes of bananas is the socially efficient level of production (assuming there are no externalities).

Question 24 (6 points)

d. Suppose that in 2021 price of diesel increases, increasing the transportation costs for banana farmers in getting their bananas to market. Explain why there would be any movement in the demand or supply curve and any change in the equilibrium price and quantity for bananas after the increase in the price of diesel.

Question 25 (4 points)

e. Suppose that in 2022 the price of bananas increases and the amount of bananas bought and sold increases. What must have happened to the demand or supply of bananas for this to have occurred?

Draw graphs using appropriate units and label them. Graphs without labels WILL NOT BE given any points even if the answer is correct. Explain clearly wherever asked.

1. Exercise on quantity equation and AD curve

1. Assume money supply is fixed at M=1000 and the velocity of money V=2.0, complete the table 1

2. Draw the AD curve that results from the table results and label as AD₁

c. What does the AD curve denote?

   d. Suppose the money supply increases to 1500 while velocity remains equal to 2.0, complete the table 2 below (use the price level from the previous table 1)

   e. Plot the AD curve with the data from Table 2 and label the curve as AD₂ (when M=1500 and V=2.0)

f. Suppose if the money supply remained at its original level of 1000 but the velocity increases to 3.0, how does it affect the AD curve?

   g. Suppose if the money supply fell to 500 while velocity remained equal to 2.0, complete the following table 3

   h. Plot the AD curve with data from Table 3 and label the curve as AD₃ (when M=500 and V=2.0)

   I. Plot the AD curve with data from Table 3 and label the curve as AD₃ (when M=500 and V=2.0)

Ollivander and Arturo Cephalopos are two producers of wands in the wizarding world. They both sell excellent wands which are extremely similar in quality and could be considered almost perfect substitutes. They engage in Bertrand competition, which means they compete by setting price. Ollivander’s marginal cost of producing one wand is 7 Galleons, while for Cephalopos the marginal cost is 10 Galleons. NOTE: 1 Galleon = 17 Sickles or 493 Knuts. Treat sickle as a cent.

1. What is the Bertrand equilibrium price in this market?

A) 10 Galleons

B)15 Galleons

C)7 Galleons

D) 9 Galleons and 16 Sickles