Economics of Enterprise Answers

3.Organizatsionnye changes are estimated by:
a) structure;
b) dynamics;
c) potential;
d) Effects;
d) consequences.

2. Development organization is determined:
a) objectives;
b) conditions;
c) potential;
d) rates and trends;
d) organizational changes.

1. Briefly explain the rationale for the establishment of Public Enterprises in India with special reference to its development objectives.

2. In the table below are cost and demand data for a pure monopolist.
Quantity demanded Price Marginal revenue Average cost Marginal cost
0 $35.00
1 32.00 $ 32.00 $48.00 $48.00
2 29.00 26.00 30.00 12.00
3 26.00 20.00 23.34 10.00
4 23.00 14.00 21.00 14.00
5 20.00 8.00 20.00 16.00
6 17.00 2.00 19.50 17.00
7 14.00 −4.00 19.28 18.00
8 11.00 −10.00 18.68 18.50
9 8.00 −16.00 18.72 19.00



(a) What is the level of price, output, and amount of profit for an unregulated monopolist?
(b) Using the data in the table, what are the price, output, and profit for a regulated monopolist that sets price equal to marginal cost compared with an unregulated monopolist?
(c) Using the data in the table, what are the price, output, and profit for a regulated monopolist that charges a “fair-return” price compared with an unregulated monopolist?
(d) Analyze the effect of regulation on the allocation of resources. Which situation is most efficient? Which situation is most likely to be chosen by government? Why?
is most likely to be chosen by government? Why?

What is opportunity cost? Explain with the help of an example, why assumption of constant opportunity cost is very unrealistic?

“Cost function expresses the relationship between the cost and its determinants.” Discuss this statement giving examples from any firm of your choice.

Fig Newton Industries is considering a project and has developed the following estimates: unit sales = 7,300, price per unit = $149, variable cost per unit = $91, fixed costs = $216,400. The depreciation is $94,700 a year and the tax rate is 40 percent. What effect would an increase of $1 in the selling price have on the operating cash flow?

On a set of axes, sketch a concave production frontier. Starting near the midpoint on the production frontier, use arrows to show that the nation incurs increasing opportunity costs in producing more of X (the commodity measured along the horizontal axis) and in producing more of Y. How does the slope of the production function change as the nation produces more of X? How about more of Y? What do these changes reflect?

Use the following supply and demand functions to answer the questions below:
Qd = 20‐2P, Qs = 5+3P

A. Determine the total tax revenue earned by the government, the amount of the tax paid by
Consumers and the amount of the tax paid by sellers.

B. What determines whether consumers or sellers pay the greater proportion of a tax—such as the tax on cigarettes—in part a? Explain your answer.