Lamya has initial investment of SR45, 000. If it were to be invested on stocks, the market interest rate would be 0.12 (12%).However, the industry uses capital and labor as inputs and sells 2, 800 belts per month at SR25 market price. If the cost of the machine that produces the belts is SR 30,000 and labor cost is 20,000. Calculate the following: a. Total revenue. b. Opportunity cost of capital c. Economic profit d. Accounting profit e. From your answer in (c), is the business profitable from the economic profit point of view? Explain your answer.
Question 2
Lamya has initial investment of SR45, 000. If it were to be invested on stocks, the market interest rate would be 0.12 (12%).However, the industry uses capital and labor as inputs and sells 2, 800 belts per month at SR25 market price. If the cost of the machine that produces the belts is SR 30,000 and labor cost is 20,000. Calculate the following:
Question 3
The table below gives some data on the population of Crescent Highland. Use the provided information to fill the table.
|
YEARS |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
|
|
Population: 16 Years Older or Over (Millions) |
LabourForce (Millions) |
Employed (Millions) |
Unemployed (Millions) |
LabourForce Participation Rate |
|
Employment Rate |
|
2000 |
105.0 |
|
58.9 |
3.3 |
|
|
|
|
2005 |
117.2 |
|
65.8 |
3.9 |
|
|
|
|
2010 |
137.1 |
|
78.7 |
4.1 |
|
|
|
|
2015 |
167.7 |
|
99.3 |
7.6 |
|
|
|
|
2020 |
189.2 |
|
118.8 |
7.0 |
|
|
|
|
2025 |
212.6 |
|
136.9 |
5.7 |
|
|
|
|
2030 |
232.8 |
|
139.1 |
14.8 |
|
|
|
|
2035 |
247.9 |
|
146.3 |
9.6 |
|
|
|
Note: Show the formula you used to calculate each column.
Question 4
Dr Rafiu is planning to send his son to study Finance either at KFUPM or Imam Abdulrahman Bin Faisal University, ceteris paribus. When the session is about to start, the school fees of KFUPM increases while that of Imam Abdulrahman Bin Faisal University remain the same. So, Dr Rafiu decides to enroll his son at Imam Abdulrahman Bin Faisal University.
(a) What kind of goods can you classify the two universities from the perspective of Dr Rafiu?
(b) What is the nature of elasticity facing Dr Rafiu (hint: elastic, inelastic, Unitary)
Question 5
From the information from XYZ Highland below,
|
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
Goods |
Production |
|
Price Per Unit |
|
|
GDP in Year 2 using Year 1 as base year |
GDP in Year 1 using Year 2 as base Year |
GDP in Year 2 in current Dollar |
|
|
Q1 |
Q2 |
P1 |
P2 |
|
|
|
|
|
A |
6 |
11 |
$0.50 |
$0.40 |
|
|
|
|
|
B |
7 |
4 |
0.30 |
1.00 |
|
|
|
|
|
C |
10 |
12 |
0.70 |
0.90 |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
1
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