Search & Filtering
Explain each of the following statements using supply-and-demand diagrams.
a) “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the
country.” (2.5 Marks)
b) “When the weather turns warm in New England every summer, the price of hotel rooms in
Caribbean resorts plummets.” (2.5 Marks)
c) “A strike by steelworkers raises steel prices.” (2.5 Marks)
d) “The price of station wagons rises.” (2.5 Marks)
QUESTION FIVE
From the figures given below;
OUTPUT(UNITS) TOTAL REVENUE (K’000)
50 750
60 840
70 910
80 960
90 990
100 1000
You are required to:
a) Calculate the average revenue [3 marks]
b) Calculate the marginal revenue [2 marks]
c) Draw the average revenue curve [2 marks]
d) Determine the market structure [1 mark]
e) Mention two features of the market structure in (d) [2 marks]
) What are the main features of the perfectly competitive market? (6 marks)
b) With the help of well-labeled diagrams, compare the short run equilibrium of a firm under a
perfectly competitive market structure and a monopoly market structure. (14 marks)
With the help of well-labeled diagrams, compare the long run equilibrium of a firm under a
perfectly competitive market structure and a monopoly market structure. [20 marks]
The market for wheat has the following demand and supply schedules:
PRICE (kwacha) QUANTITY DEMANDED QUANTITY SUPPIED
4 10,000 8,000
8 8,000 8,000
12 6,000 8,000
16 4,000 8,000
20 2,000 8,000
a) Graph the demand and supply curves. What is the equilibrium price and quantity in this
market? (5 Marks) What is unusual about this supply curve?[1] Why might this be true?[1]
b) If the actual price in this market were above the equilibrium price, what would drive the
market toward the equilibrium? (1 Marks)
c) If the actual price in this market were below the equilibrium price, what would drive the
market toward the equilibrium? (1 Marks)
d) Differentiate inferior good from Normal good [1 mark]
discuss the role agriculture in economic development. Challenges facing this sector and the necessary strategies to develop the sector.
1.suppose the production function is given by Q(L,K) = L3/4K1/4. Assuming capital is fixed, find APL and MPL
2. consider the following short run production function: Q = 6L2 – 0.4L3 a) find the value of L that maximizes output b) find the value L that maximizes marginal product c) find the value of L that maximizes average product
3. given the short run cost function as TC = 1/3Q3 – 2Q2 + 60Q + 100, find the minimum value of AVC and MC
4. a firm operates in a perfectly competitive market. The market price of its product is 4Birr and the total cost function is given by: TC = 1/3Q3 – 5Q2 + 20Q + 50. a) what level of output should the firm produce to maximize its profit? b) determine the level of profit at equilibrium. c) what minimum price is required by the firm to stay in the market?
A farmer has a capital of P2,500 for his crop production. Labor cost P240.00 per day and fertilizer cost P360.00 per bag. What would be the combination of the two resources to minimize costs? If the money will be spend on labor, how many days will his budget last to pay labor? How many bags of fertilizer can he produce? Determine the total no. of laborers can the farmer employ. Show your solution. Illustrate the isoquant curve and the isocost line of the mentioned items.
Foxie has a budget of P2,000 monthly which she spends on lunch @ P80.00 and 2 snacks equivalent to P50.00 daily. What is the combination of lunch and snacks will she have to maximize satisfaction? If she will spend all her income on lunch, how many days will her budget last? How many daily snacks can she enjoy? Determine the total no. of snacks she can have for her budget. Show your solution. Illustrate the indifference curve and budget lines for the two expenditures.
A farmer has a capital of P2,500 for his crop production. Labor cost P240.00 per day and fertilizer cost P360.00 per bag. What would be the combination of the two resources to minimize costs? If the money will be spend on labor, how many days will his budget last to pay labor? How many bags of fertilizer can he produce? Determine the total no. of laborers can the farmer employ. Show your solution. Illustrate the isoquant curve and the isocost line of the mentioned items.
