ECS3708 ASSESSMENT 2 SEMESTER 1 2024

0717513144 ECS3708 ASSESSMENT 2 2024






DISCLAIMER

The ECS3708 assignment 2 2024 is a guide that help students to answer their
2nd assessment. Therefore, students can use as the document contains different
pools of questions. Those who need further assistance may contact the given
details:

CONTACT NUMBER:

071 751 3144

EMAIL:




ECS3708 ASSIGNMENT 2 2024 0717513144

, 0717513144 ECS3708 ASSESSMENT 2 2024


Question 1

Suppose that the consumer has a Cobb Douglas utility function:

𝑈(𝑋1 , 𝑋2 ) = 𝛼𝑙𝑛𝑋1 + 𝛽𝑙𝑛𝑋2

Determine the marginal rate of substitution of 𝑋1 for 𝑋2. (4)

α
𝑀𝑈𝑋1 =
𝑋1

β
𝑀𝑈𝑋2 =
X2

𝑀𝑈𝑋1 α 𝑋2
𝑀𝑅𝑆𝑋1𝑋2 = =
𝑀𝑈𝑋2 β 𝑋1


Question 2

Suppose a share in Company A is forecasted to be R11 in the next period. If a share
similar to Company A is paying a rate of return of 10%, what must be the current price
of the share in Company A (5)

FV = 11

Rate = 10%

𝑃𝑉 = 𝐹𝑉(1 + 𝑟)−1

11
=
1,1

= 𝑅10

Therefore, the current value = R10




ECS3708 ASSIGNMENT 2 2024 0717513144