Economics of Enterprise Answers

Which is riskier, buying or selling a “put?”

A. For Kabelo, a consumer of bread and sorghum will be in equilibrium
position if the marginal rate of substitution between the two goods is equal
to ratio of prices of the two goods.’’ Do you agree with the given
statement? Justify your answer. (10 marks).

A business firms sells a good at the price of Rs 450.The firm has decided to reduce the price of good to Rs 350.Consequently, the quantity demanded for the good rose from 25,000 units to 35,000 units. Calculate the price elasticity of demand.

True or false demand curve sgift to the right when demand increases

What’s the unemployment rate if the gdp gap is 13.5%

b. Suppose that Zimal and Zawaiyar are the only consumers of perfumes in a particular market. The following table shows their annual demand schedules:

Price (Per Bottle of Perfume) Zimal’s Quantity Demanded Zawaiyar’s Quantity Demanded Market Supply
100 600 650 250
200 500 550 450
300 400 450 850
400 300 350 1050
500 200 250 1250
600 100 150 1450

Given the following information construct market demand curve and find the market equilibrium.

Suppose you borrow $100 today at an interest rate of 10 percent per year (paid at the end of each year). You put it into an investment that will give benefits of $60 per year for the next two years’ time (at the end of each year). In two years’ time, what will be the net benefit of your investment (the benefits minus the total costs, including interest costs).

b. Sahar is analyzing the probability to open her own beauty salon. If she chooses to operate her own salon she would have to pay Rs. 70,000 p.m as rent and staff that would cost her Rs. 30,000 p.m and is expected to earn Rs. 150,000 p.m. While if she continues working as the head makeup artist in one of renowned salons of Karachi she would earn 120,000. Analyze the information above and find explicit and implicit cost.

The shareholder of Al-Karam wants to maximize his profits by selling his goods in the larger quantities. In order to achieve his target (s) he hired a manager to look after his business. However, the manager instead of maximizing business profits started maximizing his own interest by selling the designs in black to the competitor’s designers. Analyze the above situation and explain the possible problem that might occur for Al-Karam.