Economics of Enterprise Answers

Start saving for retirement immediately! Even a modest amount will add up in a hurry. Jay decides to

follow this advice and puts away 1% of his annual salary of Php 500,000 per year. This equates to

Php 5,000 on his 21st birthday, and his salary will increase by 2% (on average) every year thereafter

until Jay turns 60 years old. What is the worth of Jay’s account at age 60 when the annual interest

rate on Jay’s account is 4% per year?

Let X1 , X2 , ⋯, XN be a random sample of size n from normal

distribution with mean µ and variance σ 2 . a). Find the maximum

likelihood estimator of σ 2  2 . (2 points) b). Find the

asymptotic distribution of the maximum likelihood estimator of σ 2

 2 obtained in part (a).

Briefly discuss the importance of (SMEs) small business enterprises sector in the South African economy. 

Metalfab Pump and Filter expects the cost of steel bodies for 6-inch valves to increase by $1.5 every 3 months. If the cost for the first quarter is expected to be $80, what is the present worth of the costs for a 3-year time period at an MARR of 7% per year compounded quarterly?

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?

Two firms in a homogeneous-product duopoly market (firm 1 and firm 2) have the following cost and demand functions: TC1=4q1; TC2=4q2 and Q=40-P; Q=q1+q2. a) Derive the reaction function/best-response function for each firm. b) Assume that the firms play a simultaneous move game. Characterize the Nash Equilibrium. c) Suppose the two firms play game is a sequential game with the following timing of events: 1. Firm 1 chooses output 2. Firm 2 observes firm 1’s output and then chooses output Characterize the Nash equilibrium of this sequential move game. 

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?