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Building a new bridge that connects two towns across a river costs the government a total of $800 million. It would generate a total of $850 million in revenues. The government has already spent $300 million in getting contracts for the new bridge, when experts tell them that they can build a tunnel instead for $700 million generating the same amount of revenue of $850 million as the bridge. What is the opportunity cost (or economic cost) of building the bridge at the time when $300 million had already been spent?
Draw a graph showing that given the supply of a goods ,the less responsive the quantity demanded is to price the greater is the share of the tax paid by consumers in the form of higher prices
If the federal government imposes 0.75 tax for each litre of fuel bought and sold with the objective of reducing fuel consumption explain with diagram
1.Suppose a consumer consuming two commodities X and Y has the following utility function TU= X0.5 Y0.5. If price of good X and Y are 2 and 3 respectively and income constraint is Birr 60.
A. Formulate the budget equation
B. Find the MRSXY at optimum.
C. Find the quantities of good X and Y which will maximize utility
Please refer on the diagram.
At point C the price elasticity of demand is 1. Along line segment EC of the demand curve, the demand is
Q = L2 K. Calculate the elasticity of substitution
10. The Bok Chicken Factory is trying to figure out how to minimize the cost of producing 1200 units of chicken parts. The production function is q = 100L0.5 K0.5. The wage rate is birr 9 per hour and the rental rate on capital is birr 4 per machine hour
A.B. Find the maximum output that can be produced for a total cost of birr 720.
A monopolist always faces a demand curve that is
a. perfectly inelastic.
b. perfectly elastic.
c. unit elastic.
d. the same as the market demand curve.
Suppose Natasha currently makes $57,000 per year working as a manager at a cable TV company. She then develops two possible entrepreneurial business opportunities. In one, she will quit her job to start an organic soap company. In the other, she will try to develop an Internet-based competitor to the local cable company. For the soap-making opportunity, she anticipates annual revenue of $483,000 and costs for the necessary land, labor, and capital of $434,000 per year. For the Internet opportunity, she anticipates costs for land, labor, and capital of $3,204,000 per year as compared to revenues of $3,273,000 per year.
a. What would she make in profits if she opens her organic soap company? $
enter your response here
b. What would she make in profits if she opens her Internet business? $
enter your response here
Part III: Answer the following questions as per the instructions given.
1.Given:
P= Br. 10 and TC = 120 + 4Q²
A. Find the profit maximizing level of price and quantity.
B. What will be the total profit?
2.Briefly explain the types of returns to scale.
3.Define market and State some of its elements.
