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Consider a firm that uses capital and labor as inputs and sells 5,000 units of output per year at the going market price of $10. Also assume that total labor costs to the firm are $45,000 annually. Assume further that the total capital stock of the firm is currently worth $100,000, that the return available to investors with comparable risks is 10 percent annually, and that there is no depreciation. Is this a profitable firm? Explain your answer.
Suppose a consumer having a disposable income of 300 birr consumers only two commodities X and Y and his utility function is given as U(X,Y)=50X-X2+25Y given further that price of X and Y are 1 birr and 2.5 birrr respectively, determine:
A. The consumer's optimal bundles
B. His Marginal utility of income and its interpretation
The production function of a firm is given by Q=4L1/2K1/2 suppose the cost of labor is birr 40 per unit and the cost of using capital is Birr 10 per unit
A. Determine the amount of labor and capital that should be used in order to minimize the cost to produce 40 units of output?
B. Calculate the minimum cost of producing 40 units?
2.1 Suppose the market model is described by the following demand and supply functions: Qd= 200-2P+ 4i and Qs= -200 + 3P where i =50 Answer the following questions: a) Calculate the equilibrium price (P) and quantity (Q) and indicate your answers on the graph. [03] b) If the market demand decreases by 50% what will be the new clearing price and quantity for this market? [03] c) Indicate the effect of the changes in (b) on a graph and explain what will happen to market price and quantity. [03]
Imagine that an aggressive neighboring country reduces the size of its military. Economic analysts state that the country should reduce further investment in the military. Is this a positive or normative statement? Why?
A commercial company uses capital of 70 million UM., of which 50% represents the fixed capital and pays salaries of 25 million UM. The fixed capital is depreciated in 7 years. Production value is 70 million UM.
Determine the annual cost of production, the profit mass and the profit rate calculated on turnover.
Explain why the Marginal Revenue Product of Labour curve for a firm that competes for labour in the factor market is also the firm's demand curve for labour.
At a turnover of 200 million MU. and a profit rate calculated on turnover of 15%, if the rate of profit becomes 7.5% while maintaining the same turnover, determine how the profit and the cost of production change.
1. Given the on-going pandemic, the sale of Willis cleaning products jumped 15% to Rs. 425 million and increased income by 28%. Household sales surged 7% and profits rose 65% as both prices and demand increased and a germ-averse public stocked up. Assume yourself as an ambitious manager of Willis cleaning products, who wants to use these changes in the 4th quarter to calculate the own-price elasticity of demand. You have the data on changes in price and changes in quantity sold during the quarter.
a. What would be the main challenge they would face in calculating a reliable estimate of elasticity?
a. Suppose for the 3rd quarter this challenge did not exist, rather the challenge was one of data availability. All the manager knows, a few minutes before a quickly called meeting to discuss 3rd quarter results, is that the price of a pack of 35-count Clorox Wipes increased by 12% while revenue from those wipes increased by 5%. Calculate the own-price elasticity of demand for Clorox Wipes in this quarter.
How concept of elasticity help in correcting balance of payments
