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Problem one You are a manager at Glass Inc. a mirror and window supplier. Recently, you conducted a study of the production process for your single-s ide encapsulated window. The results from the study are summarized below. They are based on eight units of capital currently available at your plant. Workers are paid $60 per u nit, per unit capital costs are $20, and your encapsulated windows sells for $12 each. Given this information, optimize your human resource and production decisions. Do you ant icipate earning a profit or loss?

Explain carefully. Labor Output 0 0 1 10 2 30 3 60 4 80 5 90 6 95 7 95 8 90 9 80 10 60 11 30 Problem two You are the general manager of a firm that manufact ures personal computers. Due to a tough economy, demand for PCs has dropped 50 perc ent from the previous year. The sales manager of your company has identified only o ne potential client, who has received several quotes for 10,000 new PCs. Accordin g to the sales manager, the client is willing to pay $800 each for 10,000 new PCs. You r production line is currently idle, 2 so you can easily produce the 10,000 units. The acc ounting department has provided you with the following information about the unit ( or average) cost of producing three potential quantities of PCs: 10,000 PCs 15,000 PCs 20,000 PCs Materials (PC component) $600 $600 $600 Depreciation 300 225 150 Labor 150 150 150 Total unit cost $1,050 $975 $900 Based on this information, should you accept the of fer to produce 10,000 PCs at $800 each? Explain. Problem three a) Firms like Papa John’s, Domino’s and Pizza Hut s ell pizza and other products that are differentiated in nature. While numerous pizza chains exist in most locations, the differentiated nature of these firms’ products perm its them to charge prices above the marginal cost. Given these above observations, is t he pizza industry most likely a monopoly, perfectly competitive, monopolistically competitive or an oligopoly industry? How will your answer change if “numerous” is interpreted to mean 10? b) “A firm in perfect competition makes no economic profit in the long run”. Discuss this statement in no more than half a page. c) Compare and contrast the short-run and long-run equ ilibrium facing a firm under conditions of monopolistic competition. Problem four For each of the following transactions, determine t he contribution to the current year’s GDP. a) On January 1, you buy 10 gallons of petrol at GHC 1 5 per gallon. The filling station purchased the petrol the previous week at w holesale price of GHC 12 per gallon.

b) You purchased a locally manufactured AK 47 used in t he 2 nd world war during an exhibition for GHC 2million. The brokerage fee w as 6% of the sale value. 3 c) A homemaker enters the work force, taking a job tha t pays GHC 40,000 a year.

The homemaker now hires a nanny who is paid GHC 16, 000 per year.

d) You are informed that you have won a lottery worth GHC 3million to be paid to you immediately.

e) You are informed that you have won a lottery worth GHC 3million to be paid to you immediately. In addition, the GNL pays you G HC 5000 to appear in their promotional advert.

f) Busy internet replaces all its stock of all compute rs with brand new locally manufactured computers from rLg worth GHC 100m. It sells its old computers for GHC 40million to rLg which resells them for GHC 60million after some minor repairs work on them.

Problem five You are given the following information about an ec onomy Gross private domestic investment: 40 Government purchases of goods and services: 30 Gross National Product (GNP): 200 Current account balance: -20 Taxes: 60 Government transfer payments to the domestic privat e sector: 25 Interest payments from the government to the domest ic private sector: 15 Factor income received from the rest of the world: 7 Factor payments made to the rest of the world: 9 Calculate the following: a) Consumption b) Net Exports c) GDP d) Net factor payments from abroad e) Private saving f) Government saving g) National saving 4 Problem six What components of Ghana’s GDP (if any) would each of the following transactions affect? Explain. a) A family buys a new generator.

b) Aunt Jane buys a new house.

c) You buy a Pizza d) Fan Milk Ghana Limited sells yogurt from its invent ory e) The government builds a new motorway f) You buy bottle of wine made in Marseille, France g) Toyota expands its factory in Abuja.