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8.2 Graphically express what effect will each of the following have on the supply of auto tires?
I. A technological advance in the methods of producing tires.
II.An increase in the prices of rubber used in the production of tires.
III.The levying of a per-unit tax on each auto tire sold.
IV.The granting of a 50-cent-per-unit subsidy for each auto tire produced. (1*4=4 marks)
1. Fill the table below and draw MC, ATC, AVC and AFC curves. (4*2= 8marks)
Output Fixed Cost Total cost ATC AVC AF MC
0 12 24
1 12 33
2 12 41
3 12 48
4 12 54
5 12 61
Why should electricity generation plants (Eskom) keep more stock rather than less stock?
An increase in the price of one product leads to an increase in demand for another product. This means that these two are?
Show that the test taking the overall significance of regression model using ANOVA table to be expressed as:
𝑹𝟐⁄𝒌−𝟏
𝑭=(𝟏−𝑹𝟐)⁄𝒏−𝒌
Where, R be a level of determination and k is the number of parameters in the n sampled regression model. (3 points)
What is a linear curve
As a business economist, critically analyse how changes in the world price of oil affect the amount of frictional unemployment in a country.
Mae owns an insurance company in a nearby town and has decided to offer conventional crop insurance to corn farmers in the area. Assume that Mae has perfect information and can write and enforce an insurance contract that requires the farmer to plant corn. Here’s how the insurance contract works. At the beginning of the year, the corn farmer pays an insurance premium of $202.5. If the weather is GOOD, Mae makes no payment to the farmer. If the weather is BAD, Mae makes an indemnity payment of $675 to the farmer.
If a farmer buys this insurance contract,what is Mae’s expected profit?
What is John’s expected utility if heplants corn with an insurance contract?
Which activity will John choose? (Cornwithout insurance, Corn withinsurance, Beans
Mae’s cousin Harjot is a keen business-man.
What is the highest premium Maecould charge such that John would stillwant to buy the insurance contract?(Assume the indemnity paymentremains at $675)
John is a farmer with $225 of wealth. He can either plant corn or beans. If he plants corn, John earns an income of $675 if the weather is GOOD and $0 if the weather is BAD. If he plants beans, John earns an income of $451 under both GOOD and BAD weather. The probability of GOOD weather is 0.7. The probability of BAD weather is 0.3. John’s utility function is 𝑢(𝐶) = 5√𝐶 , where 𝐶 is the value of consumption. Use this information to fill out the table below. (Don’t forget to include the value of wealth when you compute consumption!). The PDF will round all typed numbers to two decimals; However, you should use all decimals when computing your answers.
Consider the following provision of public good problem:
Citizen 1 initial budget: w1 = 80,000 $
Citizen 2 initial budget: w2 = 60,000 $
Cost of public good: C = 40,000
Citizen 1 Utility Function: U1(x1,g) = 3(x1) + 90,000g
Citizen 2 Utility Function: U2(x2, g) = 2(x2) + 60,000g
Notation: xi is the budget that citizen i spends on goods other than the public good; g is a public good indicator variable which takes on the value 1 when the public good is provided and zero otherwise.
Given this information, the level of utility of citizen 2 when 1 pays and 2 free-rides will be
