# Eco Assistance

1868 words 8 pages
Economic

Question 1: (a) Complete the following table of costs for a firm. (Note: enter the figures in the MC column between outputs of 0 and 1, 1 and 2, 2 and 3, etc.) Output (units) | TC(＄) | AC(＄) | MC(＄) | 0 | 55 | ---- | 30 | 1 | 85 | 85 | | | | | 25 | 2 | 110 | 55 | | | | | 20 | 3 | 130 | 43 | | | | | 30 | 4 | 160 | 40 | | | | | 50 | 5 | 210 | 42 | | | | | 70 | 6 | 280 | 47 | | | | | 90 | 7 | 370 | 53 | | | | | 110 | 8 | 480 | 60 | | | | | 130 | 9 | 610 | 68 | | | | | 150 | 10 | 760 | 76 | | (b) How much is total fixed cost at: (1) an output of 0 units?

The “0 units” total fixed cost is 55.

(2) an output of 6 units?

The “6 units” total fixed

A component of Keynesian theory, MPC represents the proportion of an aggregate raise in pay that is spent on the consumption of goods and services, as opposed to being saved.
MPC= △C/△Y (△C is the change in consumption, △Y is the change in disposable income that produced the consumption)

(b) Assume that GDP rises from \$550bn to \$650bn. Assume that this results in the consumption of goods and services rising from \$340bn to \$400bn. What is the mpc?

GDP is increase \$100bn (\$650bn-\$550bn=\$100bn), the △Y= \$100bn
The consumption of goods is increase \$60bn (\$400bn-\$340bn=\$60bn), the △C= \$60bn
So MPC= △C/△Y= 60/100 = 0.6

(c) Assuming that the mpc remains constant, what will the level of consumption be if GDP rises to \$700bn?

MPC remains constant, so MPC is 0.6
GDP rises to \$700bn, so △Y= \$700bn-\$550bn=\$150bn
MPC= △C/△Y, so △C= MPC* △Y= 0.6* 150=90
So if GDP rises to \$700bn, the level of consumption is \$340bn+\$90bn=\$430bn.

(d) If Australian consumption of goods and services is \$400bn, investment is \$120bn, government expenditure is \$150bn, exports of goods and services are \$140bn and imports of goods and services are \$145bn, what is the level of aggregate expenditure (E)?

A formula for GDP
GDP= C+I+G+(X-M), C is consumption of goods and services, I is investment, G is government expenditure, X is exports of goods and services, M is imports of goods and

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