Finance and Management

ECON 802 Economics Of Global Business

30 April 2023 15:52 PM | UPDATED 12 months ago

ECON 802 Economics Of Global Business :

ECON 802 Economics Of Global Business
ECON 802 Economics Of Global Business

Faculty of Business and Law

School of Business

 Student to complete: 
 Family name 
 Other names 
 Student number 
 Table number 

ECON 802

THE ECONOMICS OF GLOBAL BUSINESS CHALLENGES

Examination Paper

Trimester 1, 2022

Exam duration   Weighting       3 hours   50%  
Items permitted by examinerOpen Book  
Aids suppliednone  
Directions to studentsTotal number of questions: 4 questions Two (2) questions to be answered.   There are two parts: Part A and Part B. Answer one (and only one) question from Part A. Answer one (and only one) question from Part B.   You must identify the question you are answering. Not identified questions will receive a zero (0) mark.   This examination will be marked out of 100.

Turnitin Submission as indicated on the Moodle site

PLEASE NOTE:

  • Important

Your submission must be both tidy and legible. Tutors will deduct a minimum of 10 marks for submission that are not legible.

  • Important

To upload a hand written PDF, there must be at least 20 typewritten words.

Students should type at least 20 words before converting to PDF, and then upload to Turnitin.

PART A

Each question is worth 40 marks

ANSWER ONLY ONE QUESTION

Question 1 [40 marks]

There has been rumours that the government is developing a secret plan to tax mango producers. The tax t will be in $ per kilo of mangoes. A whistle blower has stolen the diagram shown in Figure 1. The variable P is measured in $ per kilo of mangoes and the variable Q is measured in kilos of mangoes per hour.

You are required to answer the following questions in your role of detective economist for an important news corporation.

  • What is the pre-tax equilibrium price of mangoes? [5 marks]
  • What is the price paid by consumers (buyers) after the tax has been introduced? [5 marks]
  • What is the price received by producers (sellers) after the tax has been introduced? [5 marks]
  • What is the burden on consumers? [7.5 marks]
  • What is the burden on producers? [7.5 marks}
  • What is the value of the tax t expressed in $ per kilo of mangoes? [10 marks]

Figure 1

Question 2 [40 marks]

This question refers to (a) a hypothetical situation where the government intervenes to break a monopoly and creates a quadropoly; and (b) the implications of collusion in oligopoly markets.

Statement

There used to be a monopolist in the market for diamonds facing the market demand curve

Q = 1600 – 5 ´  P

The graphical representation of this demand curve is shown in Figure 2. Using the criterion for profit maximization, the monopolist established that the profit-maximizing output level was 600 diamonds. The profit-maximizing price charged by the monopolist was exorbitant and the government allowed three new firms to enter the market. Each of the four (4) firms was independently producing and selling 350 diamonds. There was a drastic reduction in the market price. Unfortunately, the quadropoly colluded and agreed to produce 150 diamonds each.

  • What was the quadropoly market price without collusion? [5 marks]
  • What was the market price emerging from the cartel? [5 marks]
  • What is the fundamental implication emerging from a market switching from monopoly to quadropoly with collusion? Use of the numbers resulting from the information provided in the statement is compulsory. [30 marks]

Figure 2

PART B

Each question is worth 60 marks

ANSWER ONLY ONE QUESTION

Question 3 [60 marks]

This question refers to Table A. The country in question has based its economic growth on population growth –which includes immigration. Population increased from 20 million people (in the year 2010) to 30 million people (in 2020). The rate of inflation during the ten-year period has been zero (0) so that nominal GDP and real GDP are identical. The real wage remained constant during the ten-year period. The Gini ratio increased from 0.40 to 0.90. This is all the information available.

  • Compute GDP for 2010 and 2020 [10 marks]
  • Compute the economy’s growth rate [10 marks]
  • Did the standard of living improve? Explain carefully (it is not a “yes or no” question) [20 marks]
  • Did the country experience “inclusive growth”? Explain carefully (it is not a “yes or no” question) [20 marks]
  ItemsYear 2010 Amount ($ billion)Year 2020 Amount ($ billion)
Household Consumption9.018.0
Gross Private domestic Investment3.06.0
Total Government Spending4.08.0
Exports7.014.0
Imports5.010.0
Gross Domestic Product (GDP)??

Table A

Question 4 [60 marks]

This question refers to the following information.

An economy is experiencing high inflation. In this economy, the initial price level has doubled after one year. As a result, the new price level is at the end of year .

Your endowment of cash at the beginning of year  is .

  • What is your initial purchasing power of your ? [15 marks]
  • You kept the money idle (e.g. under the mattress) for the whole year. What is the new purchasing power of your ? [15 marks]
  • How much were you taxed by inflation, assuming that you kept the  under your mattress during the whole year? [30 marks]

Visit:https://auspali.info/

Also visit:https://www.notesnepal.com/archives/767