Q: 1
Ans:
Part A:
a. Explicit cost of the firm = wages + interest + rent
= 250,000 + 55,430 + 74,320
Total = 379,750$
b. Implicit cost of the firm = 44,500 + 16,600
Total= 61,100$
c. Total cost of the firm = explicit cost + implicit cost
= 379,750 + 61,100
Total = 440,850$
Part B:
If the value of multiplier is 2.49 then
Total profit = total revenue – total cost
= 495,680 – 440,850
Total profit = 54,830$
Part C:
Total profit = total revenue – total cost
= 413,934 – 440,850
Total loss = 26,916$
Q 2:
Ans:
Part A:
a: K = 1/1-MPC
K = 1/1-0.39
K = 1.64
b: K = 1/MPS
K = 1/0.64
K = 1.56
Part B:
a: K = 1/1-MPC
Adjusting the equation:
K (1 – MPC) = 1
1 – MPC = 1/K
MPC = 1 – 1/K
MPC = 1 – 1/2.49
MPC = 0.60
b: K = 1/MPS
adjusting the equation:
MPS = 1/K
MPS = 1/2.49
MPS = 0.40
Part C:
There is a direct relationship between MPC and the value of multiplier. If the MPC is higher, the size of multiplier would be high and vice versa.
Part D:
Change in investment = ΔI = 25$
MPC = 0.75
First we would find the value of multiplier
K = 1/1-MPC
K = 1/1-0.75
K = 4
As, K = Δy (change in income) / ΔI (change in investment)
K * Δ I = Δ y
4 * 25 = Δ y
Δ y = 100$
NOTE: - We always try our best to upload 100% correct solution BUT it is requested that you kindly review it before submission, please BEST OF LUCK,
Thanks to those students those send me Assignments and quizzes. If you have any Assignment and quiz kindly send at jamilbookcenter@yahoo.com
No comments:
Post a Comment