Suppose that there are drastic technological improvements in shoe production in Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country:

Shoes:  Sales revenue = Ps x Qs = 100 , Payments to labor = W x Ls = 10 , Payments to labor = R x Ks = 90 , Percentage increase in the price = ∆Ps/Ps = 40%

Computers: Sales revenue = Pc x Qc = 100,  Payments to labor = W x Lc = 50 , Payments to capital = R x Kc = 50,  Percentage increase in the price = ∆Pc/Pc= 0%

a. Which industry is capital-intensive?

b. Given the percentage changes in output prices in the data provided, calculate the percentage change in the rental on capital.

c. How does the magnitude of this change compare with that of change in the earnings of labor?

d. Which factor gains in real terms, and which factor loses? Are these results consistent with the Stohlper-Samuelson theorem?

Using a diagram of relative labor demand (RD), show the effect of a decrease in the relative price of computers in Foreign. What happens to the wage relative to the rental? Is there an increase in the labor-capital ratio in each industry? Explain.

Macro economics

Table contains some data about the economy of Potsteel. Assume that this is a complete record of the economy. Some parts of this question ask for numerical solutions. You must include both the final answer, and how you found that answer

As the percentage change in the GDP deflator and inflation are both measures of changes in price levels, why is there a difference between your answers to parts (b) and (c)

(b) Calculate the GDP deflator for 2017 to 2019, taking 2016 as the base year. Find the percentage change in GDP deflator for 2017 to 2019

(c) A survey help in 2016 found that the average person in Potsteel consumed 2 potatoes, and 1 unit of steel each year, while the average firm consumed 2 units of steel and no potatoes each year. Use the CPI to find the inflation rate from 2017 to 2019

33. Bruce decides to go to the weekend markets to look for some plants for his garden. There is an 80 percent chance he will find the plants he is looking for and they will be $100 cheaper than his local plant shop, and a 20 percent chance they will be $50 cheaper. The expected value for the plants will be:

1. (a) impossible to calculate from the information given.

2. (b) $100 cheaper than the local plant shop.

3. (c) $90 more expensive than the local plant shop.

4. (d) $90 cheaper than the local plant shop.

5. (e) $50 more expensive than the local plant shop.

34. Under the assumptions of perfect competition, the cost of searching for more information about prices and the quality of goods on sale _________

1. (a) is zero because everybody already knows the market price of the standardised product.

2. (b) is infinite because there is such a large number of buyers and sellers.

3. (c) falls as more information is obtained.

4. (d) rises as more information is obtained.

5. (e) is positive and constant as more information is obtained.

35. Perfect price discrimination results in producer surplus being __________ when __________ individual buyer pays their reservation price.

1. (a) minimized: some

2. (b) zero: some

3. (c) zero: no

4. (d) maximised: each

5. (e) optimised: few

The above data is the cost and price of the event of Annual Dinner . As a cost controller, using the data above briefly explain and analyze how the company can maximize the profit and minimize the cost using the below method?

a. Job Costing

b. Hybrid Costing

c. Process costing

d. Historical costing

e. Operating Costing

Topic 6. Solving a problem

Prompt

There are THREE methods in calculating Hire Purchase Interest:

• Sum-of-the-Years’- Digit (SYD)
• Straight Line Method (SLM)
• Reducing Balance Method (RBM)

Examples of calculating hire purchase interest

a) Sum of the Years’ Digit Method (SYD)

     Number the installment, given the highest digit to the first installment and the digit 1 to the last installment;

-          Add up the digits;

-          The interest proportion to each Accounting period is the:

Digit given to the installment     X                Interest

                     Sum of digits

Method of calculating HP Interest using SYD

Under a Hire Purchase Agreement, an asset with a cash price of $2,500 is to be paid by a deposit of $500 and a 5 monthly installment starting from January. The interest is $400.

                  The apportioning of hire purchase interest is as follows:

                  Step 1:

                  Cash price                              $2,500

                  -) Deposit                               $500       

                  Outstanding liability                $2,000

                  Interest                                      $400       

                  Total installment                    $2,400

Step 2:

The installments are numbered as follows:

January       5

February     4

March         3

April           2

May            1

                           15

Step 3:

Apportion the interest according to each Accounting period:

January                5/15 x $400 =       $133

February              4/15 x $400 =       $107

March                  3/15 x $400 =       $80

April                    2/15 x $400 =       $53

May                     1/15 x $400 =       $27

                                                               $400

b) Straight Line Method (SLM)

-      under this method, the interest is deemed to accrue evenly over the period of the  Hire Purchase Agreement.

Under a Hire Purchase Agreement, an asset with a cash price of $2,500 is to be paid by s deposit of $500 and a 24 monthly installments of $100.

                  The apportioning of hire purchase interest is as follows:

                  Cash price                              $2,500

                  -) Deposit                                   $500       

                  Outstanding liability                $2,000

                   Interest                                       $400       

                  Total installment                     $2,400

                  Therefore;

                  Installment/ month =       $2,400/24    =       $100

                  Interest/ month      =       $400/24       =       $16.70

c) Reducing Balance Method (RBM)

-        under this method, simple interest is calculated based on outstanding debt after each installment becomes payable.

Under the Hire Purchase Agreement, an asset with a cash price of $2,500 is to be paid by a deposit of $500 and 4 annual installments of $631. Interest rate is at 10% per annum.

The apportioning of Hire Purchase is as follows:

Cash price                              $2,500

-) Deposit                               ($500)

Outstanding liability                $2,000

+) 10% Interest                          $200       

                                                      $2,200

-) 1^st installment                      ($631)

                                                      $1,569       

+) 10% Interest                          $157       

                                                      $1,726

-) 2^nd installment                     ($631)

                                                      $1,095

+) 10% Interest                       $110

                                                      $1,205

-) 3^rd installment                      ($631)

                                                      $574

+) 10% Interest                           $57

                                                      $631

-) 4^th installment                      ($631)

-        Therefore, the apportioning for the interest is as follows:

1^st year        =       $200

2^nd year       =       $157

3^rd year        =       $110

4^th year        =          $57

                                    $524

Pr   

P Problem specification: the task is to calculate hire purchase payment using all three methods

ds McBook Air with a cash price $1000 and deposit $200 ; 4 annual installement ,interest rate -10%

MODEL

X Y Z

NUMBER OF DEFECTIVE CARS SOLD 50 100 350

TOTAL NUMBER OF CARS SOLD 150 250 600

Suppose that we randomly select 2 different (First and Second) consumers each of whom purchased a new MERCEDES car in 2020. Given this experiment answer all of the following 10 questions.

Q1) What is the probability of the first consumer’s car to be MODEL X?

Q2)What is the probability of the first consumer’s car to be either MODEL Y or MODEL Z?

Q3)What is the probability of the second consumer’s car to be either MODEL X or MODEL Z?

Q4) What is the probability of the first consumer’s car to be either DEFECTIVE or MODEL Y?

Q5) What is the probability of the second consumer’s car to be either NON-DEFECTIVE or MODEL Z?

Q6)If the second consumer’s car is MODEL Y, what is the probability that İt is NON-DEFECTIVE?

Q7) If the first consumer’s car is NON-DEFECTIVE what is the probability that it is MODEL Z?

Q8) What is the probability of the cars of both of these 2 consumers to be DEFECTIVE?

Q9)If the car of the first consumer is MODEL Z what is the probability of the car of the second consumer to be MODEL X?

Q10) If the car of the second consumer is DEFECTIVE, what is the probability of the car of the first consumer to be MODEL Y?

Car manufacturers produced a variety of classic cars that continue to increase in value. Suppose the following data is based upon the Martin Rating System for Collectible Cars, and shows the rarity rating (1–20) and the high price ($1,000) for 15 classic cars.

Develop a scatter diagram of the data using the rarity rating as the independent variable and price as the independent variable.

A scatter diagram has 15 points. The horizontal axis ranges from 12 to 20 and is labeled: Rating. The vertical axis ranges from 0 to 4500 and is labeled: Price. Moving from left to right, the first point is located at approximately (13, 4300), with the general trend of the next 5 points moving downward rapidly, ending around 750 on the vertical axis. The next 9 points move downward much more slowly in a diagonal direction, staying fairly clustered between 250 and 750 on the vertical axis.

A scatter diagram has 15 points. The horizontal axis ranges from 12 to 20 and is labeled: Rating. The vertical axis ranges from 0 to 4500 and is labeled: Price. Moving from left to right, the first point is located at approximately (13, 100) and the next 9 points stay fairly clustered between 0 and 500 on the vertical axis. The next 5 points move up rapidly, beginning at approximately 1000 on the vertical axis and ending with the last point around 4000 on the vertical axis.

A scatter diagram has 15 points. The horizontal axis ranges from 12 to 20 and is labeled: Rating. The vertical axis ranges from 0 to 4500 and is labeled: Price. Moving from left to right, the first point is located at approximately (13, 300) and the next 9 points stay fairly clustered between 250 and 750 on the vertical axis. The next 5 points move up rapidly, beginning at approximately 1250 on the vertical axis and ending with the last point around 4250 on the vertical axis.

A scatter diagram has 15 points. The horizontal axis ranges from 12 to 20 and is labeled: Rating. The vertical axis ranges from 0 to 4500 and is labeled: Price. Moving from left to right, the first point is located at approximately (13, 4000), with the general trend of the next 5 points moving downward rapidly, ending around 500 on the vertical axis. The next 9 points move downward much more slowly in a diagonal direction, staying fairly clustered between 0 and 500 on the vertical axis.

Does a simple linear regression model appear to be appropriate?

No, there appears to be a curvilinear relationship between the two variables.No, there doesn't appear to be a relationship between the two variables.    Yes, there appears to be a linear relationship between the two variables.

(b)

Develop an estimated multiple regression equation with x = rarity rating and

x²

as the two independent variables. (Round b₀ and b₁ to the nearest integer and b₂ to one decimal place.)ŷ =

(c)

Consider the nonlinear relationship shown by equation (16.7):

E(y) = β₀β₁^x

Use logarithms to develop an estimated regression equation for this model. (Round b₀ to three decimal places and b₁ to four decimal places.)

log(ŷ) =

(d)

Do you prefer the estimated regression equation developed in part (b) or part (c)? Explain.

The model in part (b) is preferred because r² is higher and the p-value is lower.The model in part (b) is preferred because r² is lower and the p-value is lower.    The model in part (c) is preferred because r² is higher and the p-value is lower.The model in part (c) is preferred because r² is lower and the p-value is lower.

2) When the real wage is above the level that equilibrates supply and demand:

Select one:

a. It creates a deadweight loss in the labor market.

b. the quantity of labor demanded exceeds the quantity supplied.

c. GDP definitely rises.

d. Interest rate rises.

3) If Central Bank A cares only about keeping the price level stable and Central Bank B cares only about keeping output at its natural level, then in response to an exogenous increase in the price of oil:

Select one:

a. both Central Bank A and Central Bank B should increase the quantity of money.

b. Central Bank A should increase the quantity of money, whereas Central Bank B should keep it stable.

c. Central Bank A should decrease the quantity of money, whereas Central Bank B should increase it.

d. both Central Bank A and Central Bank B should keep the quantity of money stable.

4) In a Keynesian Cross economy without the foreign sector, the marginal propensity to save is 0.2. Investment is 100; government expenditure is also 100. Taxes are 100. How much does total savings change if marginal propensity to save goes up from 0.2 to 0.3?

a. goes up by 90

b. goes up by 100

c. does not change

d. None of the above or cannot be determined without more information

5) Using the simple Keynesian Cross analysis, assume that the consumption function is given by C = 100 + 0.6(Y-T). If planned investment is 200 and T is 300, the level of G needed to make equilibrium Y equal 1,000 is (assume that net exports are zero):

Select one:

a. 60

b. 240

c. 250

d. 280

e. None of the above.