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Given the following Cobb-Douglas consumption function:
𝑈 = 𝑋1 0.5 𝑋2 0.4; 𝑠𝑢𝑏𝑗𝑒𝑐𝑡 to: 2𝑋1 + 5𝑋2 = 250 i) Mathematically find the optimum values (the quantities which maximize the Utility function) of X1 and X2 ii) Find the marginal unities of X1 and X2 and interpret iii) Find the Lagrangian multiplier and interpret iv) Show the optimum consumption combination using graph
Ketchup is a complement for hot dogs. If the price of hot dog rises, what happens in the market for ketchup?
Suppose that price of one of the two goods increases while price of the other good and the total budget of the consumer kept unchanged. i) What is the consequence on the budget line and the purchasing power of the consumer? Explain logically with illustration. ii) Will the consumer be better off (be on the higher indifference curve) or worse off (be on the lower indifference curve)? iii) Show the changes in welfare in terms of income effect and substitution effect
When the Botswana Meat Commission (BMC) increased beef price from P10 per Kg to
P16.50 per Kg, the supply of beef cattle to the BMC rose from six hundred per week to 900
per week. Use the midpoint formula to calculate the coefficient of elasticity of supply for
beef to the BMC and interpret the elasticity coefficient.
Whaling was the chief occupation of New Bedford, Massachusetts, in the early nine
teenth century. Much whaling labor was highly skilled and the labor all lived in New
Bedford. Suppose that the market for whaling labor was competitive initially.
(a) True or False: If the owners of whaling ships in New Bedford band together to set
up a central hiring hall, the employment of whaling labor will fall and the income
of the owners will rise.
(b) True or False: If the owners now charge to each laborer a personal fee for entrance
to the hiring hall, their income will rise still further and employment will rise back
to the competitive level.
Why is competition good for the consumer from an economic insight perspective?
Explain any 5 characteristics of oligopoly
Explain the economic impact of covid 19 on the south African economy
Explain the second fundamental theorem of welfare economic.
What is the rationale behind the rationing system for allocation of scarce resources?
