The Government of a given economy has to decide about the allocation of the budget of 2017. (Budget :1 000 000 $) Different...

The Government of a given economy has to decide about the allocation of the budget of 2017.

(Budget :1 000 000 $)

Different studies evaluated the cost and benefits of several projects :

-        Building a new free Zone : Cost : 300000, Revenues : 700000

-        Producing Aluminum : Cost : 150000, Revenues : 350000

-        Investing the budget in the financial system : 5% interest rate

The final decision of the government is to build the Free Zone

1.   Calculate  accounting costs

2.   Calculate opportunity costs

3.   Calculate Economic Cost

4.   Calculate  Economic profits

1. Calculate your Economic profits

Problem 2 (5 points)

The following table shows for 2000 and 2016 the cost of a basket of goods and the nominal average wage:

1.    Calculate the real income in 2000 and in 2016

2.    What is the percentage increase in the cost of basket

3.    What is the percentage increase in the salary (nominal)

4.    Calculate the salary in 2016 that maintain the purchasing power of 2000