Economics of Enterprise Answers

Bank will give you after 5-years $1000, 000 with considering 12%-interest. For
this situation evaluate the present, annual, & future values at simple & compound
interest rates.

1. The demand for petrol rises from 500 to 600 Barrels when the price of a particular scooter is reduced from Birr. 25000 to Birr.22000. Find out the cross elasticity of demand for the two. What is the nature of their relationship?
A company has the following demand equation
Q= 1000–3000P+10A
Q = Quantity demanded
P = Product Price
A = Advertisement expenditure
Assume that P = 3 and A = 2000
2. Suppose the firm drops the price to Birr. 2.50 would this bebeneficial.
3. Suppose the firm raises the price to Birr. 4.00 While increasingits advertisement expenditure by 100 would this be beneficial? Explain

Given that IS is Y = 2500-50i, and the interest rate reaction function is ip = 2 + 0.5(P-P*),
where ip is the central bank policy rate. Assume that i (interest rate) is 0.5 + ip (interest rate is a wedge over the policy rate). Determine the AD function. If AS function was Y =0.25(P-P*) + 2000 determine Y* and P* and inflation rate. Assume P* = 105.

Explain the type of pricing strategy that you as the manager of a
company would implement for Good X and Good Y with the following price elasticity of demand co efficients. Use diagrams to motivate your answer.


a). Good X: 2.3
(b). Good Y: 0.6

Because of health awareness many people reduce their consumption of animal oil and increase their consumption of vegetable oil to reduce cholesterol problems. What will happen to demand curve of both products?

Explain, using diagrams, what happens to a perfectly competitive firm in the short run when the demand for its product suddenly increases

Why is it not possible for a perfectly competitive firm to make supernormal profits in the long run?

Petrol and diesel prices have collapsed amid the coronavirus outbreak. According to figures released by Bloomberg, the cost of a barrel of fuel has fallen dramatically in the past months. A barrel of Brent Crude oil has now fallen from slightly under $65 in mid-January to currently trending in the mid to high $20s. The figure above indicates that oil price is at USD33.15 per barrel as of 6th April, 2020, obvious scenario of down trending.

Using the theory of Supply & Demand, analyse the factors that contributed to the downfall of global petrol price and evaluate the impact on socio-economy in your home country, Malaysia.

The United States economy has a GDP of $15 trillion, investment is $2 trillion, government purchases $3 trillion, and net exports is -$1 trillion. What part of the expenditure method of calculating GDP is missing? What dollar amount of GDP is the missing category?

Retail price of fuel is uniformly distributed between $2.00 and $3.50
A) Calculate the retail average price of fuel?
B) what is the probability that the price of fuel is less than $3.00
C) what is the probability that price of fuel is less than $2.00