Reference no: EM133777079

Economics for Managers

Instructions

Question 1

Balochistan, a province in Pakistan experienced its worst-ever flooding last year when three months of heavy downpours submerged about a tenth of the country. Furthermore, relief efforts have largely focused on the provision of shelter, safe drinking water, food items, and health interventions amidst supply chain disruptions. Imports cannot be sustained.

Required:
Suppose you owned a grocery outlet in the Balochistan province affected by the floods. Answer the questions that follow.

Use at least one microeconomic figure to explain 4 factors that affected the supply of your grocery business.

Use at least one microeconomic figure to explain the impact of at least 4 factors that affected the demand for the grocery products you supply.

Question 2

Considering the potential profits to be made in a lucrative fast food business, Simone quit her teaching job in Brisbane, where she had been earning AUD 80,000 per year, to start her own food kiosk business in Surfers Paradise. To save on rent, Simone utilized her friend's property. He was earning AUD 45,000 annual rent from this property. Also, to start the business, Simone used AUD 80,000 from her own savings on which she earned 4% interest per year. Further, in order to start the business, Simone borrowed $50,000 from the bank and was paying 6% interest per year.

Simone's first year of business can be summarised as follows:

 

Item	Amount $
Revenue- Food section	260,000
Revenue- Liquor	190,000
Revenue-Soft drinks	65,000
2 Cashiers expense (wages per worker)	(30,000)
Food van	(100,000)
Manager wages	(60,000)
Food preservatives	(30,000)
Equipment expense	(60,000)
Motorcycle expense to ease movement in city	(30,000)
2 food freezers (cost per freezer)	(5000)

 

Required:
Calculate Simone's average variable cost and average total cost.

Based on your calculations of accounting profit and economic profit, provide calculations to show why you would you advise Simone to either return to her teaching job or continue with the food kiosk business?

Question 3

Nike is one of the high-class sports shoe dealers in Melbourne with the following short run cost curves. Answer the questions that follow.

Required:
Use 2 characteristics to explain the market structure for the Nike sports shoe company.

Calculate the profit or loss for the Nike sports shoe company.

Suppose you are the Manager at the Nike shoe store, examine the non-price techniques that you can employ to increase revenue.

Question 4
Assume that the table below is extracted from the Kenyan Bureau of Statistics records for Year 2022-2023. Use the information in this table to answer the question that follows.

 

Item	Base year 2022		2023
	Production	Price	Production	Price
	(Units)		(Units)
Tractor manufacturing components	2500	1500	3000	10,000
Used cloth	4,000	50	5000	60
Components used tractor factory production	8,000	500	11000	1,200.00
Cloth	9,000	30	11,000	35
Cultural festival gifts	1,500	2	1,700	3
Elephant endangered species tasks seized at Nairobi Airport	8000	10000	9000	12,000.00
Milk	5,000	1.3	7,000	2.5
Computers	2000	500	2,500	600
Printers	500	300	400	355
Raw materials for car assembling plant	4500	250	4450	300

 

Required:
Calculate Kenya's nominal GDP, real GDP and GDP deflator for 2023.

The Kenyan Bureau of Statistics reported that the inflation rate was increasing. Suppose you are working with the National Bank of Kenya, explain why you would be concerned with a worsening inflation rate?

Question 5:

Bad weather has affected everyone but the main impact is on the poor and labourers. Common people are feeling like they don't have anyone they can trust in the government. They feel they don't have any voice. It appears to them that only rich and powerful people are getting money and all the help. The people tell many stories of corruption. Estimates indicated that GDP fell in 2023 by $14.9 billion, equivalent to 4.8 percent of financial year (FY) 2022 GDP.

Required:
Calculate the GDP in 2023 and explain whether the floods caused economic expansion or contraction (recession)? Explain your answer using the aggregate demand and aggregate supply model.

Use a macroeconomic graph to explain the effects of government expenditure.

Adapted Harvard Referencing.