Economics of Enterprise Answers

The fear of nationwide lockdowns due to the current pandemic has pushed many consumers into “panic buying”. Critically evaluate this statement and use demand and supply analysis to analyse the possible impact of panic buying on market prices.

With the aid of a diagram, explain the economic theory underlying a kinked demand curve. Justify whether it would be applicable in this case

Based on the arguments provided in the article, describe the type of market structure that Apple belongs to.

You are the owner of a car dealership and you practice “no haggle” sales policy. Last year, you made a record profit of GHC 1.5 million. Your dealership competes in a market with price elasticity of demand of -1.3. Your marginal cost is GHC 12000. How much should you charge to maintain your record profit?

Consider the following game: 

Strategy 

Player 2 

C D 

Player 

1 

A 3, 7-x 2,3 

B 4,4 7-x,5 

a) For what values of x is strategy D strictly dominant for player 2? 

b) For what values of x is strategy B strictly dominant for player 1? 

c) For what values of x is (B,D) the only Nash equilibrium of the game? 

You are the manager of a firm that produces furniture. All your clients are in Kumasi (K) and Accra (A). Suppose the monthly inverse demand function for your furniture in in Accra and Kumasi combined is 𝑃 = 1200 − 4𝑄. Because of prohibitive cost of transporting furniture between Accra and Kumasi, you set up two plants, one in each town. The cost of producing furniture at each facility is given by 𝐶_A (𝑄_A ) = 8000 + 6𝑄_A² and 𝐶_K(𝑄_K) = 8000 + 6𝑄_K² where 𝑄 = 𝑄_A + 𝑄_K and 𝑄_A and 𝑄_K are the quantity of furniture produced at Accra and Kumasi respectively. Determine the profit maximizing amounts of electricity to produce in the two facilities, the optimal price and the profit. 

The leader of a federal political party made the following campaign promise: "My administration will increase spending on mask production by cutting spending on national defence." The promise can be kept if: (select all that apply)

Select all that apply:

a.

the economy moves along the production possibilities curve in the direction of more masks.

b.

the economy moves along the production possibilities curve in the direction of a lesser quantity of defence.

c.

the economy moves from a point inside the production possibilities curve toward a point outside the production possibilities curve.

d.

taxes are raised.

There are more possibilities of invention under __ of labour. *

1 point

Supply

Division

Mobility

None of the above

The price for a good A has risen from 175 rub. to 210 rub. The demand for a good B has increased from 5400 units to 7100 units. Calculate the cross- price elasticity of demand?