QUESTION (a) In a certain economy the marginal propensity to save is 02 and the autonomous consumption equals 400 i Formulate the consumption function ii If the Government’s expenditures were to...

QUESTION

(a)

In a certain economy

the marginal propensity to save is 02 and the autonomous consumption equals

400

i

Formulate the consumption function

ii

If the Government’s

expenditures were to increase by 50% what would be the resultant change in

National income

(b)

The demand and supply

schedules for carrots in a certain market are given below:

Determine

the equilibrium quantity and price by graphical method

(c

) Explain how the concept of elasticity

guides decisions in the following situations:

(i)

Government’s tax

policy on household consumption

(ii)

Devaluation policy to

encourage exports and discourage imports

Price discrimination

by a monopolist

QUESTION

(c)

In a certain economy

the marginal propensity to save is 02 and the autonomous consumption equals

400

iii

Formulate the consumption function

iv

If the Government’s

expenditures were to increase by 50% what would be the resultant change in

National income

(d)

The demand and supply

schedules for carrots in a certain market are given below:

Determine

the equilibrium quantity and price by graphical method

(c

) Explain how the concept of elasticity

guides decisions in the following situations:

(iii)

Government’s tax

policy on household consumption

(iv)

Devaluation policy to

encourage exports and discourage imports

Price discrimination by a monopolist