Question 01
A firm pays in cash $250000 in wages,$55430 in interest on borrowed money capital and $74320 for the yearly rental of its factory building. If the entrepreneur worked for somebody else as a manager, he would earn at most $44500peryear and if he lent out his money capital to somebody else in a similarly risky business, he would at most receive $16600 per year. Keeping in view the above information:
(A) Calculate:
a) The explicit cost of the firm.
b) The implicit cost of the firm.
c) The total cost of the firm.
(B) If the entrepreneur received $495680 from selling his year's output, then calculate his total profit.
(C) What will be the total profit if the entrepreneur's total revenue were $413934 instead?
Question 02
(A) Find the value of multiplier if:
a)MPC = 0.39
b)MPS = 0.64
(B) If the value of the multiplier is 2.49 then find out:
a)MPC
b)MPS
(C) What is the relationship between the value of multiplier and MPC?
(D) Find the change in the equilibrium level of output when there is a $25 increase in investment spending and the PC is 0.75.
Question 01
A firm pays in cash $250000 in wages,$55430 in interest on borrowed money capital and $74320 for the yearly rental of its factory building. If the entrepreneur worked for somebody else as a manager, he would earn at most $44500peryear and if he lent out his money capital to somebody else in a similarly risky business, he would at most receive $16600 per year. Keeping in view the above information:
(A) Calculate:
a) The explicit cost of the firm.
b) The implicit cost of the firm.
c) The total cost of the firm.
(B) If the entrepreneur received $495680 from selling his year's output, then calculate his total profit.
(C) What will be the total profit if the entrepreneur's total revenue were $413934 instead?
Question 02
(A) Find the value of multiplier if:
a)MPC = 0.39
b)MPS = 0.64
(B) If the value of the multiplier is 2.49 then find out:
a)MPC
b)MPS
(C) What is the relationship between the value of multiplier and MPC?
(D) Find the change in the equilibrium level of output when there is a $25 increase in investment spending and the PC is 0.75.
