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Yes. For example, the opportunity cost of spending money is the interest you could have earned had you put it in a savings account. The opportunity cost of leisure is the wage you could have earned working instead. And so forth

Reply 823

cool beans

1.The wage rate (w) set by a monopoly supplier of labour is such that :

a) MRPL > W
b) MCL < W
C) MCL = W
D) none of these

2.The profit maximising rule in the factor market is?

a) MPP = MCC and MPP < APP
b) MRP = factor price and MRP > ARP
c) MRP = factor price and MRP < ARP
d)none of these.

3. The isoquant: cost line condition for output maximisation is:

a) MRTS = price ratio
b) -MRTS = -price ratio
c)MRTS = price ratio and all costs are spent
d) -MRTS = -price ratio and all costs are spent

not sure on these 3 questions after doing a past paper, help urgently appreticated!! x

Reply 824

tomohara

Apagg

Yes. For example, the opportunity cost of spending money is the interest you could have earned had you put it in a savings account. The opportunity cost of leisure is the wage you could have earned working instead. And so forth

Ok cheers for that. So just to check, the opportunity cost isn't like in your example how much interest you would've earned, but just the interest?

Reply 825

cool beans

anyone who can answer those questions i set above will get rep, it's kinda urgent lol

Reply 826

alex_hk90

19

cool beans

not sure on these 3 questions after doing a past paper, help urgently appreticated!! x

Since you're desperate I'll have a go but I can't be sure that they'll be correct as I haven't done those topics for a while (and the last one not at all).

cool beans

1.The wage rate (w) set by a monopoly supplier of labour is such that :

a) MRPL > W
b) MCL < W
C) MCL = W
D) none of these

a) (but possibly d)) Monopoly suppliers of labour hire workers up to the point where MRPL = MCL, where W = ACL at this quantity of labour. At this point, MRPL > W.

cool beans

2.The profit maximising rule in the factor market is?

a) MPP = MCC and MPP < APP
b) MRP = factor price and MRP > ARP
c) MRP = factor price and MRP < ARP
d)none of these.

c) The only profit-maximising rule I know is MR=MC, and this looks the closest to that. Also I think MRP < ARP should mean that there's a higher profit overall. I'm really not sure though.

cool beans

3. The isoquant: cost line condition for output maximisation is:

a) MRTS = price ratio
b) -MRTS = -price ratio
c)MRTS = price ratio and all costs are spent
d) -MRTS = -price ratio and all costs are spent

d) Intuition. :wink:

Sorry I couldn't be of more help but you did say it was urgent.
Hopefully someone will correct my answers. :smile:

Reply 827

tomohara

Ok cheers for that. So just to check, the opportunity cost isn't like in your example how much interest you would've earned, but just the interest?

I'm not sure I understand the distinction you're making

Reply 828

alex_hk90

19

tomohara

Ok cheers for that. So just to check, the opportunity cost isn't like in your example how much interest you would've earned, but just the interest?

If you mean do you write "the opportunity cost is the interest" or "the opportunity cost is the interest you would've earned", then I think either is acceptable.

Reply 829

sammyrj

15

tomohara

Ok cheers for that. So just to check, the opportunity cost isn't like in your example how much interest you would've earned, but just the interest?

Well it's just the same thing really. It *would* be the amount of interest, but we can't say specifically how much that is without more information. Instead, we'd just use the generalisation that it is 'the interest'.

Reply 830

'Crowding out Private sector investment' due to Fiscal deficit. What does that mean?

Reply 831

When the government borrows (fiscal deficit), it tends to do so in the hundreds of millions, and usually billions, of pounds. An increase in the demand for loanable funds by £1bn will drive up the interest rate, making borrowing more expensive and reducing private sector borrowing. This reduces the amount of funds available for investment.

Reply 832

Apagg

When the government borrows (fiscal deficit), it tends to do so in the hundreds of millions, and usually billions, of pounds. An increase in the demand for loanable funds by £1bn will drive up the interest rate, making borrowing more expensive and reducing private sector borrowing. This reduces the amount of funds available for investment.

So, would it be correct to say (for what the effect of fiscal deficit is):

It would put upward pressure on interest rates. A large deficit means the government needs to borrow more hence this causes debt to grow. The government may need to raise interest rates in order to encourage enough people to buy the debt. Higher interest rates cause lower growth and may crowd out private sector investment. This is known as financial crowding out.

I don't know if it would encourage people to buy the debt as people will opt to save as oppose to spend and increase consumption. :s-smilie:

How would AD increase, as investment and consumption is falling. :confused:

Reply 833

Buying debt is saving, they're the same thing.
Government expenditure increases total expenditure by G. However, the rise in interest rates depresses investment, decreasing total expenditure. The increase in G should exceed the decrease in I (except in the case of 100% crowding out).

Now, remember the Keynesian consumption function says that consumption is a function of income. As income has risen, consumption will also rise. Whilst the marginal propensity to consume might fall, the total value of consumption should still rise.

Reply 834

What does 'increasing worklessness' mean? (Unit 5)

EDIT: Why does supply of labour becomes more elastic over time?

Reply 835

MeAndBubbles

12

iRealGirl

What does 'increasing worklessness' mean? (Unit 5)

EDIT: Why does supply of labour becomes more elastic over time?

I don't have a definitive definition of that, I heard the term in the tv media.

More elastic, I assume labour in aggregate not the individual. Well, people take time to find work and see 'job search' time as good. In the long run, these workers return to work, so in the long run it's more elastic. That's all I can think of at the minutes, just got in. :smile:

Reply 836