Economics of Enterprise Answers

The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded, the price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded, which of the two are more elastic and which is least elastic? and Why?

The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.

The price of a pack of cigarettes increased by 10% and there is a 5% drop in the quantity demanded.

total fixed cost = 600k per month, max capacity = 120k watches, output requires 60k hrs, wage rate =8.00 hr, demand is P=28-Q/20k. how many additional watch can be produced with an extra hr of labor? what is the marginal cost of additional watches/? as a profit maximizer what price and output should the firm set? is production capacity fully utilized? what contribution does the line provide?

Samantha Jones has a job as a pharmacist earning $30,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $40,000 per year or to purchase a pharmacy that generates revenue of $200,000 per year. To purchase the pharmacy, Samantha would have to use her $20,000 savings and borrow another $80,000 at an interest rate of 10 percent per year. The pharmacy that Samantha is contemplating purchasing has additional expenses of $80,000 for supplies, $40,000 for hired help, $10,000 for rent, and $5,000 for utilities. Assume that income and business taxes are zero and that the repayment of the principal of the loan does not start before three years.(b) Suppose that Samantha expects that another pharmacy will open nearby at the end of three years and that this will drive the economic profit of the pharmacy to zero. What would the revenue of the pharmacy be in three years?(d) Suppose that Samantha expects to see all the pharmacy at the end of three years for $50000 less that the price she paid for it and that she requires a 15 precent return on her investment. Should she still purchase the pharmacy?

During the 1970s the postwar baby boomers reached working age, and it became more acceptable for married women with children to work. predict how this increase in the number of working is likely to affect the equilibrium wage and quantity of employment. Draw supply curve and demand curve to illustrate your answer.

Question 7 Consider the following short-run production function (where L = variable input, Q =
output):
Q = 6L3 – 0.4L3
a. Determine the marginal product function (MPL).
[1 marks]
b. Determine the average product function (APL).
[1 marks]
c. Find the value of L that maximizes Q.
[1 marks]
d. Find the value of L at which the marginal product function takes on its maximum
value.
[1 marks]
e. Find the value of L at which the average product function takes on its maximum
value.
[1 marks]
[TOTAL: 5 MARKS]