Economics of Enterprise Answers

7. The market for lemon has 100 potential consumers, each having an individual demand curve: P = 201 - 100Qi, where P is price in dollars per cup and Qi is the number of cups demanded per week by the ith consumer. Find the market demand curve using algebra. Draw an individual demand curve and the market demand curve. What is the quantity demanded by each consumer and in the market as a whole when lemon is priced at P = $1/cup?

Given market demand Qd = 40 -3 P, and market supply P =1/2 Qs + 10
a. Find the market equilibrium price and quantity?
b. What would be the state of the market if market price was fixed at Birr 10 per unit?
c. Calculate and interpret price elasticity of demand at the equilibrium point.

The demand function is given by D(p)= 5,000-100p, where p is the price and If the price is 20 birrs, calculate price elasticity of demand

The municipality of Smallville has arranged to borrow $30 million in order
to implement several public projects (flood control, school security, etc.). The
interest rate will be 3% per year, payable at the end of each year. This $30
million debt will be retired by making principal payments of $5 million at
the end of each year. The Board of Supervisors is concerned that it will take
too long to pay off this debt. How many years will it take to retire this $30
million debt and its associated interest payments?

l. You loan from a bank the amount of P 100,000 with a rate of simple interest of 20% but the interest was deducted from the loan at the time the money was borrowed. If at the end of 1 year you have to pay the full amount of P 100 000 what is the actual rate of interest?

A government reduces tax on carrot. This causes the price of carrots to fall by 50%. Demand then rises by 50% . The price elasticity of demand for carrots in this case is?

Why does an indifference curve slope towards the right?

Assume the aggregate demand of an economy is rising at 3% but its productive capacity is only rising at 2%. Discuss the type of inflation this would lead to? Use a diagram to motivate your answer.

Explain how fiscal policy can be implemented if an economy is in the downswing of a business cycle

Discuss and motivate whether the following market structures can engage in price discrimination? 1) Perfect competition. 2) Monopoly