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Economics

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1.Suppose E[X] = 2 and EY] =0 as in part 1. Can we calculate E[XY]? explain why or why not?

2.The economy of Wekare produces cars in a perfectly competitive labour market. a) Using diagrams illustrate and explain the impact of a fall in the price of cars on the demand and supply of labour and real wages for the car market in Wekare. (1/2 marks) b) Assume that Wekare, cares about its workers in the car industry and decides to implement minimum wages in the car industry which are set above the new market clearing wage rate. Illustrate and explain the implications of this decision. (1 72 marks) c) Outline two costs of high unemployment? (2 marks)

3.Answer questions 4, and 5 from Table 1 Table 1: Quantity demanded and supplied for the "Boost Juice" Price (S) 4 6 8 10 12 14 Quantity demanded 2,000 1,600 1,200 800 400 0 Quantity supplied 1,500 1,600 1,700 1,800 11,900 2,000 4. Draw the demand and supply curves for "Boost Juice". What are the equilibrium price and quantity of drinks? Explain why this is the equilibrium point. Label all axis and curves. (1 mark) 5. Explain, using the graph in question 4 above, what would happen if the price was initially $4? Identify any surplus or shortage on the graph above. Label all axis and curves.