Economics of Enterprise Answers

in a perfectly competitive market, the break even point is a point where ?

if TR=2+3Q^2, then MR is:

In a perfectly competitive market for widgets, the market price is R15. Use the cost information  for a firm producing widgets in this market given in the table below and answer Question 6

1.     In 2012, the box industry was perfectly competitive. The lowest point on the long-run average cost curve of each of the identical box producers was $4, and this minimum point occurred at an output of 1,000 boxes per month. The market demand curve for boxes was                                                                                                     2 marks

where P was the price of a box (in dollars per box) and Q_D was the quantity of boxes demanded per month. The market supply curve for boxes was

Where Q_S was the quantity of boxes supplied per month.

a.      What was the equilibrium price of a box? Is this the long-run equilibrium price?

b.     How many firms are in this industry when it is in long-run equilibrium?

1.    Given the following cost function: TC = 1500 + 15Q – 6Q 2 + Q3            2 marks         

a.    Determine the total fixed cost for producing 1000 units of output and 500 units of output.

b.    What is AFC at:

                                                            i.     1000 units of output b)

                                                          ii.     500 units of output iii.

c.     Determine TVC, AVC, MC and AC at 50 units of output.

Determine the best level of output for a perfectly competitive firm that sells its product at P = $4 and faces TC = 0.04Q3– 0.9Q2 + 10Q + 5. Will the firm produce this level of output? Why?                                                                               2 marks      

Below are data from a regular survey of about 5000 households, called the Current Population Survey, which are grouped into different demographic categories.

Demographic Group

No. of people

Housewives (age: above 20)

500,700

Full time students (age: above 16)

960,500

Full time workers (age: 20-65)

2,000,600

Part time workers (age: 10-15)

500,000

Part time workers (age: 19-35)

1,750,000

Employed in father’s business (age: above 18)

300,000

Workers (age: 17-60)- temporary on leave

75,000

Workers(age: 17-60)- waiting to be recalled to their old job

40,000

Does not have job but actively looking for job for past 6 weeks  (age: above 16)

90,000

Elderly people who cannot work (age: above 65)

64,000

Use the information to calculate:

a) Adult population.

b) Labor force.

c) Not in the labor force.

d) Labor force participation rate.

e) Unemployment rate.

(1)  Suppose the First National Bank holds $900,000 in deposits and $300,000 as reserve:

(a)How much is left to be loaned out?

(b) What is the reserve ratio and multiplier of this transaction?

(2)  Suppose the First National Bank holds $700,000 in deposits and the multiplier is 25:

(a)Show the transactions of 1^st, 2^nd and 3^rd National Bank.

(b)What is the total money supply in the economy?

The economist for the Grand Corporation has estimated the company's cost function, us-

ing time series data, to be

TC = 50 + 16Q -20° + 0.20%

where TC = Total cost I

Q = Quantity produced per period

a. Plot this curve for quantities 1 to 10.

b. Calculate the average total cost. average variable cost, and marginal cost for these quan-

tities, and plot them on another graph.

c. Discuss your results in terms of decreasing, constant, and increasing marginal costs.

Does Grand's cost function illustrate all these?

1.    Given the following cost function: TC = 1500 + 15Q – 6Q 2 + Q3               

a.    Determine the total fixed cost for producing 1000 units of output and 500 units of output. 

b.    What is AFC at: 

                                              i.     1000 units of output b) 

                                            ii.     500 units of output iii. 

c.    Determine TVC, AVC, MC and AC at 50 units of output.