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The maize grown in Mphumalanga is used primarily to feed livestock. Suppose that the current "foot and mouth disease" scare were to lead to a significant drop in the size of cattle herds nationwide. What impact would you expect in the market for maize?


1During the winter of 2004–2005, wholesale gasoline prices rose rapidly. Although retail gasoline prices increased, retailers’ profit per gallon fell. The difference between price and average variable cost for self-serve regular gasoline averaged RUPEES 7.7 a CRORE in the first quarter of 2005 compared with 9.1CRORE for all of 2004. In addition, many gasoline retailers exited the market.

A)Show how an increase in wholesale gasoline prices affects the individual retailer’s marginal cost and supply curves. 

B) Show how shifts in the individual retailer’s supply curves affect the market supply curve.

C)Show and explain why an x per gallon increase in wholesale gasoline prices results in a retail market price increase that is less than x.

d. Identify the effect of wholesale gasoline price increases on the profit margins of an individual gasoline retailer. 

E)Why has the increase in wholesale gasoline prices prompted many gasoline retailers to exit the market?


Exercise 1.4 Output and income are in equilibrium when planned expenditures AE are equal to national income, Y, in other words, meaning Y = AE. (a) Suppose the AE function is AE = 165 + 0.8Y. Draw a diagram showing the aggregate expenditure function. (b) In your diagram draw the 45◦ line that shows all points at which national income and aggregate expenditures are equal (Y = AE) (c) Using your diagram, or a numerical example, or an algebraic solution, find equilibrium output and income in this example and show it in the diagram.



Suppose that in an economy with no government the aggregate expenditure function is: AE = 50 + 0.8Y. (a) Draw a diagram showing the aggregate expenditure function, and indicate the level of planned expenditure when income is 150. (b) In this same diagram, show what would happen to aggregate expenditure if income increased to 200. (c) What are the levels of autonomous expenditure and induced expenditure at income levels of 150 and 200. (d) In this same diagram show what would happen if autonomous expenditure increased by 20. 


Is this a good or bad time to buy a car?


What are average cost and marginal cost? Given total cost function: C = Q ^ 3 - 12Q ^ 2 + 6Omega*Q Find



Average cost and marginal cost

Consumer spends all his or her income on food (X) and clothing (y). The current prices are p1 10 birr and P2 5birr and he or she maximizes utility by purchasing 20 units of X and 50 units of y.find how much he or she will purchase if she or he spends the entire income on x

Provide a brief explanation on how the South African economic growth had been performing


since 2000. Further, what conclusions can be drawn from fuel tax increase effects on the


economic growth and public social welfare.

Does temporal relief on fuel tax suggested by the Finance Minister have a positive


impact on the economic growth

Discuss the fuel tax increase impact the economic growth of S.A

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