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What are the main components of aggregate demand

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Reference no: EM133125836

1) Mr. Hamid Mohammad is planning to pursue MBA studies. Initial inquiry shows that he will have to pay RM 25,000 as tuition fee, buy books for RM 1000, pay for transport RM 500. The MBA study programme will extend over 15 months. Mr Hamid is working now with a salary of RM 2,500 per month.. Being a full time student, he will have to forego the income from his present job for the period of study. Work out the

(a) Financial cost, and

(b) the Economic Cost of doing MBA (Hint: Identify implicit costs and explicit costs)

2 ) A firm has the following revenue and cost functions. TR = 60 Q - Q2 TC = Determine the quantity level at which the firm maximizes its total profit. (Hint: use marginal revenue = marginal cost rule)

3) Explain the term price elasticity of demand? How is it measured? What factors influence market demand for products? If the price elasticity is -3 and RM 100 is the marginal cost of product X, what should be the optimal sale price? (Hint: apply the mark-up rule)

4) What is meant by price discrimination? What are the conditions to make price discrimination effective? Discuss your answers with examples from the Airline Industry.

5 )Write short notes on: a. Law of diminishing returns and the short-run cost curve b. Economies of Scale and the long run cost curve c. New Economies of Globalization

06) Briefly explain how firms compete/set price under - a. Perfect competition b. Oligopoly

7) In recent years, the price of oil has fallen drastically. Explain if this is a result of:

a. A drastic reduction in the cost of production (i.e. shift in the supply curve)?

b. A fall in the demand for oil and oil products ( i.e. shift in the demand curve? c. Other factors ? (Hint: Search through the material on oil pricing in the global market)

8) How does the macroeconomic environment affect the firm's decision making? Explain briefly the important variables influencing business activities.

9) What are the main components of Aggregate Demand? Which components are more volatile than others?

10) What determines the foreign exchange rate? Discuss critical factors which may have caused the recent depreciation of the Malaysian Ringgit.

Reference no: EM133125836

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