Economics of Enterprise Answers

different between scarcity and shortage

Does a change in consumers’ tastes lead to a movement along the demand curve or to a shift in the demand curve?

1. If a company sets aside $1,000,000 now into a contingency fund, how much will the company have in 2 years, if it does not use any of the money and the account grows at a rate of 10% per year?

Fill in the gaps in the table below 
Quantity of Variable input TotalOutput	Marginal Product ofVariable input
	Average Product ofVariable input

0	0 
1	225  
2 300
3 300	
4	1140 
5 225	
6 225

Suppose Q gives the production function Q=150KL and the price of labor and capital is 2.5 and 6 birr respectively. If the total outlays of the firm is 3000 Birr. Determine the level of employment of both inputs that maximizes output.

Suppose that cost function is of a firm is given by C=Q³-4Q²+14Q+60. Then ,determine

a. Fixed Cost function and AFC at Q=2

b. TVC function and AVC at Q=2

c. MC function and MC at Q=2

d. Minimum average cost

Suppose the short run production function can be represented by

Q = 60,000L²– 1000L³. Then, determine

a. The level labor employment that maximizes the level of output

b. The level of employment that maximizes AP_L and the maximum AP_L

Price increases from $10 to $12 and the price elasticity of demand is -0.5. The quantity demanded is 450 units. What was it before?

Suppose you have the following production function: Q = f (L, K) = 10L ^½ K^½. In addition, the price of labor is $1 and the price of capital is $4

a. What is the optimal amount of labor and capital if you want to produce 20 units?

b. What is the level of minimum cost ?( Ans L=4 and K=1,Min C=$8)

Suppose the perfectly competitive price is given as $46 and the total cost of the firm is given by TC=14X+2X², find

a. The profit maximizing level of output for the firm?

b. The profit of the firm?