Economics of Enterprise Answers

The store sells a special item whose daily demand can be described by the

following pdf:

Daily demand D 0 1 2 3

P(D) 0.15 0.3 0.45 0.1

The store is comparing two ordering policies: (1) Order up to 3 units every

3 days if the stock level is less than 2, else do not order. (2) Order 3 units if the

stock level is zero, else do not order. The fixed ordering cost per shipment is $200.

Immediate delivery is expected.

Which policy should the store adopt to minimize the total expected daily

cost of ordering?

The country Autarka does not allow international trade. In Autarka, you

can buy a wool suit for 3 ounces of gold. Meanwhile, in neighboring countries,

you can buy the same suit for 2 ounces of gold. If Autarka were to allow free trade,

would it import or export wool suits? Why?

1.  H&M has been selling 15,000 jackets per month for 355 ETB. When they increased the price to 500 ETB, they sold only 12,000 Jackets. What is the demand elasticity? If the marginal cost is 250 per Jacket, what will be the desired markup price? Was raising the price profitable?

The daily demand for a product in a shop can assume one of the following values: 100, 200, or 300 items with probabilities 0.2, 0.5 and 0.3. The owner of the store is thus limiting the alternatives to stocking one of the indicated three levels. If the owner stocks more that it can be sold in the same day the remaining items must be disposed at a discount price of 50 cents per item. Assume that the owner pays 80 cents per item and sells it for 120 cents, find the optimal stock level.

How would each of the following affect the Pakistan market supply curve for corn?

a. A new and improved crop rotation technique is discovered.

b. The price of fertilizer falls.

c. The government offers new tax breaks to farmers.

A firm borrows P2,000 for 6 years at 8%. At the end of 6 years, it renews the loan for the amount due plus P2,000 more for 2 years at 8%. What is the lump sum due?

QD = 25 - 3P and QS = 10 + 2P, write the inverse demand function

Suppose that the utility function for two

commodities is given by U = x² y³ and the budget constraint is 10x + 15y = 250. Find the values of x and y that maximize utility 

Latesha​, a single​ taxpayer, had the following income and deductions for the tax year 2021.

Compute Latesha's taxable income and federal tax liability for 2021 ​(round to dollars and ignore the qualified business income deduction and​ self-employment taxes for this​ problem).

Salary $100,000

Business income $25,000

Interest income from taxable bonds $10,000

Interest income from tax-exempt bonds $5,000

Total income from whatever source derived $140,000

Minus: Exclusions, as provided in the tax law

 Interest income from tax-exempt bonds -($5,000)

Gross income $135,000

Minus: Deductions for Adjusted gross income

 Business expenses $?

Adjusted gross income (AGI) $?

Minus: Deductions from AGI:

 Account name? $?

Account name? $?

Taxable income $?

Tax $?

The demand for Habesha beer in Addis Ababa is hypothesized to be determined by price of beer (PRICE), Price of all other goods (OTHERSPR), Income (INC) and per capita advertising (ADVERT). And the OLS estimation result is given by

DD= -5463+0.3643 PRICE-0.15439 OTHERPR+0.8892 INC+0.0831 ADVERT

(11.2225)(1.7141)(1.0895)(6.7752)(2.6327)

R^2=0.950

DW statistics=1.716

a. Interpret the estimation result

b. What is the meaning of the R2?

c. What will happen to the demand of Habesha beer if the average income of the community is increased by 1000 birr?