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Eric runs a bicycle repair business and employs a single worker, Vanessa. He charges $6 to repair a flat tire. Vanessa's marginal product is given by 𝑇=1.5−𝐿
100 where 𝐿
L is the number of hours she works in a day and 𝑇
T is the number of additional tires that she repairs.
Suppose Eric currently pays Vanessa $8.25 per hour. How many hours changing tires, per day, should Eric have Vanessa work?
In an exchange economy, there are two people, A and B, and two goods, 𝑥1and 𝑥2. Their respective utility functions and endowments are
𝑢𝐴(𝑥𝐴1,𝑥𝐴2)=min{𝑥𝐴1,2𝑥𝐴2}
𝑢𝐵(𝑥𝐵1,𝑥𝐵2)=𝑥𝐵1+𝑥𝐵2
𝜔𝐴=(9,19)
𝜔𝐵=(9,0)
Note: The As and Bs in the equations above are not powers but rather superscripts to indicate each agent.
The minimum and maximum possible amounts of 𝑥𝐴2 on the contract curve are
Minimum 𝑥𝐴2
Maximum 𝑥𝐴2=
The minimum and maximum possible amounts of 𝑥𝐴1 on the contract curve are
Minimum 𝑥𝐴1=
Maximum 𝑥𝐴1=
Suppose that the U.S. government reduces the tariff on imported coffee, and a reputable study is published indicating that coffee drinkers have lower rates of colon cancer. How would we expect that this will affect the supply curve and why?
What would we expect to happen to the demand curve and why?
What collective effect will these changes(s) have on the direction of the equilibrium price and quantity?
Suppose the production function is given by Q=L3\4K1\4 find APL and MPL function
The cost function of a monopoly firm is TC = 10 + 2Q where TCq is the total cost of producing the quantity. The demand in this market is expressed by the equation Q 14 = 14 – P where P denotes the price. Estimate the profit to be made by the monopolist.
Explain the concept of income elasticity and cross price elasticity. Also explain how the nature of commodity is determined by positive and negative values of income elasticity.
Johnny Rockabilly has just finished recording his latest CD. His record company’s marketing department determines that the demand for the CD is as follows:
PRICE
NUMBER OF CDS
$24
10,000
22
20,000
20
30,000
18
40,000
16
50,000
14
60,000
The company can produce the CD with no fixed cost and a variable cost of $5 per CD.
a. Find total revenue for quantity equal to 10,000, 20,000, and so on. What is the marginal revenue for each 10,000 increase in the quantity sold?
b. What quantity of CDs would maximize profit? What would the price be? What would the profit be?
c. If you were Johnny’s agent, what recording fee would you advise Johnny to demand from the record company? Why?
Income is rising, and income elasticity of demand is positive.
Describe what will happen to total revenue in the following situations.
a. Price decreases and demand is elastic.
b. Price decreases and demand is inelastic.
c. Price increases and demand is elastic.
d. Price increases and demand is inelastic.
e. Price increases and demand is unitary elastic.
f. Price decreases and demand is perfectly inelastic.
g. Price increases and demand is perfectly elastic.
“The growth rate of the economy is slowing down. Prices are going up rapidly. The government sticks to a money printing policy and policy of increasing its expenditure. Sri Lanka faces severe hardship in finding foreign exchange to repay debt and payment for important imports. Country’s agriculture seems facing a troublesome path. And So many issues in the economy”. Write an essay on Sri Lanka’s present economic crisis.
