Search & Filtering
1. The Circular Flow Model of the Economy:
a. What are the four general categories of economic resources that companies need? List each one. 4 Marks
b. Using TD Bank provide an example of each type of resource. 4 Marks
Carefully Analyse the Circular Flow Model of the Economy shown above!
c. Which arrow shows the flow of goods and services? Why? 2 Marks
d. Which arrow shows the flow of spending by households? Why? 2 Marks
- Demand and Supply
a. In this market, what would be the equilibrium price and the equilibrium quantity? 2 Marks
b. If price is $10, what would be the quantity demanded? 2 Marks
c. If price is $25, what would be the quantity supplied? 2 Marks
d. If the price is $25, would there be a surplus or a shortage? What would be the amount of the surplus or the shortage? 2 Marks
1. Elasticity
You own a small-town movie theatre. You currently charge $5 per ticket for everyone who comes to your movies. Your friend who took an economics course in college tells you that there may be a way to increase your total revenue. Given the demand curves shown, answer the following questions. 15 Marks
Find the Profit Maximizing output and total profit from the information
Demand Function :Q=20-0.4P and
Cost function:TC (C) =25+Q+0.2Q²
As the chapter states, GDP does not include the value of used goods that are resold. Why would including such transactions make GDP a less informative measure of economic well-being?
By using the knowledge of relationships among the various costs of production concepts fill the blank space of the following table.
Quantity TC TFC TVC ATC AVC MC
0 125
10 5
20 105
30 110
40 255
50 3
60 3
The government purchases component of GDP does not include spending on transfer payments such as Social Security. Thinking about the definition of GDP, explain why transfer payments are excluded.
The production function of a firm is given by Q=4L^0.5K^0.5 suppose the cost of labour is birr 40 per unit and the cost of using capital is Birr 10 per unit.
A. Determine the amount of labour and capital that should be used in order to minimize the cost to product 40 units of output?
B. Calculate the minimum cost of producing 40 units?
A monopolist with the cost function C=1/2Q^2 faces a demand curve Q=12-P,
A. What will be his equilibrium price and quantity?
B. If for some reason the firm behaves as if it were in a perfectly competitive industry, what will equilibrium price and quantity?
C. How much money will the firm require to forgo monopoly profits and behave competitively instead?
Show that minimum wage rate set above the market clearing wage rate causes excess supply of labour. Why would government impose minimum wage despite knowing its effect on unemployment?
