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1)Autonomous consumption [a] = $10, Marginal Propensity to Consume [ b] = 0

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1)Autonomous consumption [a] = $10, Marginal Propensity to Consume [ b] = 0.9 Investment = $140 Calculate: 1)Consumption function 2)Aggregate Expenditure [AE] function 3)Equilibrium Real GDP [Y] 4)Multiplier

2)Distinguish among (a) gross profits, (b) operating profits, and (c) net profits.

3)The figure given below is the circular flow diagram of the economy of Argos. a. Place the numbers below in the appropriate blanks the diagram below. Rent Wages Profits Interest Transfer payments Taxes (households only) $150 600 90 120 180 Savings Government spending Exports Imports Investment $200 220 150 120 110 340 Imports: 120 Consumption: Exports: 150 Consumption less imports: Taxes: 340 Disposable income: Total business revenue: Government spending: Zm32.com BUSINESS SECTOR HOUSEHOLD SECTOR 220 960 Transfer payment: 180 Investment: 110 Factor incomes: 960 600 Savings: 200 Factor payments: Wages: Interest: 120 Rent: 150 Profits: 90

4)Automation, broadly referring to the adoption of machines and computers in the production process has become increasingly more popular across many sectors and countries. For example, the market for industrial robots has experienced a dramatic expansion in the last couple of decades, as shown in Figure 1. Figure 1 Annual shipments of industrial robots worldwide (thousand units) 563 491 381 Source: Modified from Exhibit 2, McKinsey & Company, Industrial Robotics: Insights into the Sector Future Growth Dynamics, July 2019. Note: Forecast 2018-2021 294 At 221 166 150 the 14 121 the same time, the prices of labour and robots have been changing. The case of US manufacturing sector in the last few decades is shown in Figure 2. 20F 2021 Figure 2: Robot prices and labour compensation in manufacturing in the US (1990=100) Source: Tilley, Jonathan, "Automation, Robotics, and the Factory of the Future", September 7, 2017, McKinsey & Company. 2000 2005 2010 2015 220 Labor costs 200 180 160 140 120 100 80 60 40 Robot prices 1990 1995 2000 2005 2010 Now, consider Bruno, who owns a small manufacturing firm and produces windscreens for automobiles. Currently Bruno uses two robots and ten workers including Angela in his production.
(Question 4] Discuss in 100-150 words how Bruno's decision to increase the use of robots and the general trend of increasing automation could affect in the future the following: • Angela's bargaining power, • Angela's real wage, and Bruno's profit. You must refer to Figure 3 in your discussion. The description of Figure 3 can be found in Unit 4 Section 12 of the prescribed textbook. [10 marks] Figure 3: Fraction of offers rejected in the ultimatum game, according to offer size and the number of Responders 100 One Responder Two Responders 75 Fraction of offers rejected (%) 50 25 ILLE 0 0 5 10 15 20 25 30 35 40 45 50 Fraction of the pie offered by the Proposer to the Responder(s) (%)
[Question 5] Does Bruno's decision to use more robots bring about a Pareto improvement? Discuss in 50-100 words based on your answer for Question 4.