1. A company is considering an investment of $4 million in a project that has a seven-year life. The company has estimated its discount rate at 12%. Details of the sales and costs associated with the project are as follows:

Note: The annual overhead includes $200,000 per year depreciation on the asset. It also includes apportioned fixed overhead of a further $50,000 per year.

1. Calculate the net present value of the project. Provide a commentary on the discounting process and on the net present value that you calculated.
2. Carry out a sensitivity analysis on the five variables of this project. Include the life of the project and the discount rate. Identify what you consider the most critical variable and advise management what they should do, if anything, before adopting the new project.
3. Advise the company on whether it should proceed with the project and provide reasons for your advice.

One of the great new “marketplaces” of our time is eBay. Spend some time on the eBay website (www.ebay.com). Find a product that you are interested in and follow the bidding. How much would you be willing to pay? Consider the following questions. (Objective 2)

How is eBay providing value to its customers?

Describe the relationship they have with their customers.

What are their markets?

What effects would each of the following have on aggregate demand or     aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward.

(a) A reduction in interest rates at each price level.

(b) A sizable increase in labor productivity.

(c) The nation’s currency appreciates against its major trading partners .

#8 The cost of hiring workers includes not only payments made directly to workers, that is, wages, but payments made on behalf of workers as well, such as contributions by employers to pension plans and to health-care insurance for employees. How would a decrease in the cost of employer-provided health insurance affect the economy?  

CH8 

#1.Suppose the people in a certain economy decide to stop saving and instead use all their income for consumption. They do nothing to add to their stock of human or physical capital. Discuss the prospects for growth of such an economy. 

#4. China’s annual rate of population growth was 1.2% from 1975 to 2003 and is expected to be 0.6% from 2003 through 2015. How do you think this will affect the rate of increase in real GDP? How will this affect the rate of increase in per capita real GDP? 

#10. Suppose that for some country it was found that its economic growth was based almost entirely on increases in quantities of factors of production. Why might such growth be difficult to sustain? 

1. Consider the long-run production of shirts. The cost of the indivisible inputs used in the production of shirts is $500 per day. To produce one shirt per day, the firm must also spend a total of $4 on other inputs-labor, materials, and other capital. For each additional shirt, the firm incurs the same additional cost of $4.

1. Compute the average cost for 20 shirts, 50 shirts, 100 shirts, and 500 shirts.
2. Draw the long-run average cost curve for 20 to 500 shirts per day. (2marks)

c) What is the minimum set of conditions necessary for the OLS estimator to be the most efficient unbiased estimator (BLUE) of a parameter? List each of these minimum conditions and explain what they mean in one or two sentences.

b) Choose any two of the conditions and for each one (i) explain what could go wrong in estimating a model should the condition not hold, and (ii) give one real world example (each) of a research design where the condition might not be satisfied.

Two steel factories are currently emitting 8,000 tons of pollution each (for a total of 16,000 tons). Pollution reduction (abatement) costs for Plant 1 are given by MCR₁= 0.02Q and for Plant 2 by MCR₂ = 0.03Q, where Q represents tons of abatement, and MCR the marginal cost of pollution reduction.

1. Suppose a regulation is implemented that requires each firm to reduce its pollution by 4,000 tons. What will be each firm’s pollution control costs? Draw two graphs on Excel(one for each firm) to support your answer.
   
2. Suppose instead that a pollution tax of $240 per ton of pollution emitted is implemented. How much will each firm now pay in pollution reduction costs (not considering taxes)? How do total pollution reduction costs with the tax compare to the total costs from part (a)? Briefly explain why the costs differ. How much does each firm pay in taxes? Use two graphs on Excel (one for each firm) to support your answer.For Problem 2, please upload your completed MS Excel spreadsheet in HuskyCT to support your answers.

In the recent past, Japan and Argentina have had completely different experiences in terms of inflation dynamics. Japan experienced neither sustained inflation nor disinflation, whereas Argentina had very high inflation rates. How would a cut in the target inflation rate affect expectations in the two countries? What does this imply in terms of short-run and long-run Phillips curves?

• Given the different perspectives of diverse groups regarding international trade, on what should national trade policy be based? (Efficiency? Most beneficial impact on production (GDP) and economic growth? The largest number of people who benefit? The smallest number of people who are harmed? Other considerations?)

. Using Philips curve illustrate relationship between inflation and unemployment in the short run and long run.

Prepare a detailed report in context to examining the following contents in detail:

1. Economic environment of UAE (200 words)

2. Competition law in UAE (200 words)

3. Intellectual property rights in UAE (200 words)

4. Free trade zone regulations in UAE (200 words)

5. Consumer protection laws in UAE (200 words)

6. Commercial Arbitration in UAE (200 words)

7. VAT in UAE (200 words)

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Note: Please do not copy from internet Plagiarism is strictly prohibted

After a wildly successful advertising campaign by the German beer industry, many beer executives felt giddy about the stratospheric beer prices. But other execs feared that such high prices would cause demand to decline, which would then cause prices to drop. Are these concerns valid, or do the Germans need to take economics lessons? (It might help to draw a graph)

What are the relevant economic trends and forecasts for the electric automobile industry?

3.3. Assume S = –N$200m + 0.08Yd; M= 0.1Y; I = N$300m; G = N$150m; X = N$140m and t = 0.21Y.
(a) Calculate the total-spending function and equilibrium income. Illustrate this on a graph. [5 marks]
(b) Indicate on the graph the effect of an N$100 million increase in investment spending and comment on the magnitude of change in the equilibrium income relative to the change in investment spending. Calculate the new equilibrium income. [5 marks]
(c) Assume the marginal tax changes to 0.25Y. How will this change influence the total spending curve? Illustrate this on your graph. [5 marks

Price discrimination is an important tool both for firms attempting to eliminate competitors but is also used with great frequency as simply another way to increase profits. Consider the following type of problem. Part 1. Suppose you are running an electricity distribution firm, and you have two basic types of consumers. One group of consumers has a relatively high price intercept with a flat demand curve, and the other group of consumers has a relatively low price intercept and a steep demand curve. What method of price discrimination might you wish to use? Explain.