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The price elasticity of demand for urban transit fares has been estimated to lie between -0.1 and -0.6. Based on these results, what is the economic argument for raising transit fares? What political arguments might local governments and transit authorities encounter in opposition to these economic arguments?
Output. TotalCost Price. AveageVariableCost. AverageTotalCost. MargianlCost. Profit.
0 $1,000 $500 ? ? ? ?
1 $1,200 $500 ? ? ? ?
2 $1,350 $500 ? ? ? ?
3 $1,550 $500 ? ? ? ?
4 $1,900 $500 ? ? ? ?
5 $2,300 $500 ? ? ? ?
6 $2,750 $500 ? ? ? ?
7 $3,250 $500 ? ? ? ?
8 $3,800 $500 ? ? ? ?
9 $4,400 $500 ? ? ? ?
10 $5,150 $500 ? ? ? ?
a. Complete the above table. What is the firm’s fixed cost? How can you tell? Hint: if the firm is not producing output, it still must pay its fixed cost but incurs no variable cost.
b.Graph the cost curves and draw in the price. What is the profit-maximizing price and quantity? How much profit does the firm earn? Show the profit on the graph?
c.Suppose the price rises to $550 a ton. How much output should the firm produce?
d. Think about the market in the long run. If the price remains at $550 a ton, do you think that new firms will enter or exit the market? Why? What effect do you think that will have on price in this market?
A German worker takes 400 hours to produce a car and 2 hours to produce a case of wine.A French worker takes 600 hours to produce a car and X hours to produce a case of wine.
a.for what value of x will gains from trade be possible ? Explain.
b . For what values of X will Germany export cars and import wine? Explain.
in 2021, Kante, a typical consumer, goes into a super market in central London, wehre he has four cups of coffee from the coffee shop section
a) Explain what we might observe about the toltal utility and marginal utility of the individual. how does your explanation illustrate the law of diminishing returns?
b) upon leaving he buys only orange juice and yoghurt for his family. Kante earns $100, orange juice is priced at $2 a carton and yoghurt is priced at $4 a tub. Draw Kante's budget constraint.
c) Now suppose that all prices increase by 10 per cent in 2022 and that Kante's salary increases by 10 per cent as well. Draw his new budget constraint
d) Explain your diagram in (C) above and indicate what account for the shift of Kante's budget constraint and the implication(s) of this shift in the budget line.
suppose that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Then inflation turns out to be higher than they both expected
In the long run all cost are fixed
Suppose that in the model of Myers and Majluf (1984) the parameters take on the following values: λ = 0.60, H = 3, L = 2, I = 1.0, R = 1.25, r = 10 per cent. Use the above data and answer the following questions: (a) Does the model have a separating equilibrium, a pooling equilibrium, or both? (b) Based on your answer to question (a), what is the gain in wealth of the current shareholders of a firm that announces the issuing of new shares to finance the project of investment?
Tri-pak Packaging produces cardboard boxes that are sold in bundles of 1000 boxes. The market is highly competitive, with boxes currently selling for R100 per thousand. Tri-pak’s total and marginal cost curves are: TC = 3,000,000 + 0.001Q2 MC = 0.002Q where Q is measured in thousand box bundles per year.
The price elasticity of demand is -0.9. The income elasticity of demand is 0.5. The cross-price elasticity of demand between your good and a related good is 2.0. What can you determine about consumer demand for your product from this information
a. If a large increase in investment increases labor productivity, explain what happens to:
i.Potential GDP
ii.Demand and supply of labor Employment
iii.Employment
iv.The real wage rate
v. Real GDP per person
b. If a severe drought decreases labor productivity, explain what happens to:
i.Potential GDP
ii.Demand and supply of labor Employment
iii.Employment
iv.The real wage rate
v.Real GDP per person
