Economics of Enterprise Answers

Suppose that a firm produces at an output level where the MPL is 50 units and the wage rate is Rs 25 (w). Suppose further that the MPK is 100 units and the rental price of land is Rs.40 Q1 = Is the firm producing efficiently? Q2 = If the firm is not producing efficiently , how might it do so?

If a firm is producing in the long run using capital and labor inputs, how the least cost combination of the inputs will be determined? Show graphically and mathematically

Assume you are managing a firm that recently entered in the transportation service, which is meter taxi service similar with Ride, Feres and others. If you have to estimate the demand for the transportation service you provide, (6 marks) a. What would be the explanatory variables you include in a regression model? b. Indicate how you may utilize the results of your demand estimation for decisionmaking. c. How do you make your pricing decision? d. What do you think is the market structure for meter taxi transportation in Addis? Give your justifications

Suppose the own price elasticity of demand for good X is 2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y

is 6. Determine how much the consumption of this good will change if: (a) The price of good X increased by 5 percent, (b) the price of good Y increase by 10 percent, (c) Advertising decreases by 2 present, (d) income falls by 3 percent

You are the manager pf a firm that produces and markets a generic type of soft drink in a competitive market. In addition to the large number of generic products in your market, you also compete against major branch such as Coca-Cola and Pepsi. Suppose that , due to successful lobbying efforts of sugar producers in the Sri Lanka, Ministry of Finance is going to levy a Rs. 100 per Kg tariff on all imported raw sugar – the primary input for your product. In addition, Coke and Pepsi plan to launch an aggressive advertising campaign designed to persuade consumers that their branded products are superior to generic soft drinks. How will these events impact the equilibrium price and quantity of generic soft drinks?.

Suppose that a firm produces at an output level where the MPL is 50 units and the wage rate is Rs.25 (W).Suppose further that the MPK is 100 units and the rental price of land is Rs.40.

Q 1= is the firm producing efficiently?

Q 2 = If the firm is n producing?

Efficiently, how might it do so?

What is the MPL and MPK based on the input rates specified?

If the rental price of the land was Rs.20 for unit what was the wage rate?

Suppose that the rental price of capital is expected to increase to Rs.25 while the wage rate and the labour input will remain unchanged under the terms of labour contract. If the firm maintains efficient production, what input rate of land will be used?

A bond issued by the national government pays 1000 Php at the end of each year for 6 years, plus an additional 10,000 Php when the bond matures at the end of 6 years. What is the maximum payment for this bond if the existing opportunity cost of funds is 10%?

Use the graph to explain whether an efficient level of emissions can be attained in two different regions for example an urban and a rural area.

production period output capital labour

1 225 10 20

2 240 12 22

3 278 10 26

4 212 14 18

5 199 12 16

6 297 16 24

7 242 16 20

8 155 10 14

9 215 8 20

10 160 8 14

estimating cd function

estmate the parameters of a cobb-douglas production function using the least squares regression method