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The total cost function of a firm is given by c = 100 + 40 q + 5q2.
A. Find Total fixed cost
B. Find the Marginal cost equation and the marginal cost of the 5th unit
C. Find Average variable cost equation and the AVC of the 4th unit
D. Find average fixed cost equation and the AVC of the 6th unit
E. Find average total cost equation and the ATC
Over the past 40 years, technological advances
have reduced the cost of computer chips. How do
you think this has affected the market for computers?
For computer software? For typewriters?
Consider the markets for film streaming services,
TV screens, and tickets at movie theaters.
a. For each pair, identify whether they are
complements or substitutes:
r Film streaming and TV screens
r Film streaming and movie tickets
r TV screens and movie tickets
b. Suppose a technological advance reduces the cost
of manufacturing TV screens. Draw a diagram to
show what happens in the market for TV screens.
c. Draw two more diagrams to show how the
change in the market for TV screens affects the
markets for film streaming and movie tickets.
Twins Anna and Aayan are excited to be starting college next
year. Anna is leaving home behind and heading to college in Bangalore
while her brother Aayan is going to live at home and attend the local
university. Up till now they have always used cash or gift cards received for
holidays or birthdays to pay their expenses. Any savings they had was in
the piggy bank in their rooms. Now that college is almost there, they realize
that cash may not be the best option.
Required:
1. Why is cash not always a good option?
2. What should Anna consider when picking a bank? What about
Aayan? Do they have different needs?
1.1 Money is regarded as a factor of production. Do you agree with this statement? Support your answer. [02] 1.2 Use the production possibility frontier (PPF) to illustrate and explain the scarcity, choice and opportunity cost of a farmer who is producing maize and sorghum. Use your own values. [09] 1.3 Draw and explain the diagram showing the three major flows in the economy. [06] 1.4 Show the effects of the following on the demand curve: a) An increase in the number of awareness against consumption of coffee due to its health risk. [02] b) A increase in the price of tea (coffee is the substitute product) [02] c) An increase in the income of consumers for an inferior good. [02] d) A decrease in the price of cornflakes (Milk is a complementary product) [02
2.2 Suppose South African government decides to impose a tax on the chickens that are imported from the United States. Use a diagram to show and explain the welfare cost that will result from the imposition of import tariff. [06]
2.3 The demand function for good (X) is given by Qx= 100 – 0.7Pz + 1.5Y – 0.3Px Where: Qx = Quantity demanded for good X Px = Price of good X Pz = Price of good Z Y = Level of income
Calculate price elasticity of demand, income elasticity of demand and cross price elasticity of demand when Px = R80, Pz = R150 and Y = R300. Thoroughly interpret your results.
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.
- Maria can read 20 pages of economics in an hour. She can also read 50 pages of sociology in an hour. She spends 5 hours per day studying.
- Draw Maria’s production possibilities frontier
- for reading economics and sociology.
- What is Maria’s opportunity cost of reading
- 100 pages of sociology?
Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run.
a. Ifthepriceofheatingoilrisesfrom$1.80to$2.20
per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.)
1. Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.
a. Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, and the efficient level of output.
b. On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the social cost exceeds the social value.) Explain.
