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Give the utility function U (x1, x2) = a * x2 * x1 + x1 where x1 and x2 conditions quantities consumed of two goods a = number letters surname last name / number letters first first name. It is known that the vector of the best unit prices of the two goods is (3 2) and the consumer's income is 1800 p.m.
Q. Determine the function of uncompensated demand for both goods. What happens to the consumer's utility if his income increases by 1 p.m.
8. Assume that a competitive firm sells it’s output for a price of 16 dollars per unit and
producing q units of output costs the firm 1/3q3 dollars. The firm’s production process
pollutes a nearby river and total environmental damage caused is e = 3q − a where
a is the amount of pollution abatement effort. The firm’s cost of abating a units of
pollution is 1/3q3.
(a) Find the firm’s profit maximizing output quantity and the resulting amount of
environmental damage in the absence of any regulation.
(b) If the firm must pay a tax of $7 per unit of output produced, find the new profit
maximizing output quantity and amount of environmental damage.
(c) Assume there is public backlash to the tax on output, so the government needs
to determine what subsidy per-unit of abatement effort would replace the tax
and yield the same environmental damage. What subsidy on abatement effort
should the government set?
what is the meaning of isocost slope? Provide a mathematical explanation.
Show that if the importing country faces an upward sloping foreign supply curve (excess supply curve), a tariff may raise welfare in the importing country.
Definition of long run profit maximization and example?
in a market for a given commodity the quantity demand was 14 units hen the market price was 6 birr, when price was increases to 8 birr the quantity demand was decreased to 12 units. what is the elasticity of demand ?
Consider the following payoff matrix, where the payoff are profit/losses of a firm in millions
Firm B
Low Price High Price
Firm A Low Price (10, 10) (30, -10)
High Price (-10, 30) (40, 20)
Based on this payoff matrix in table, determine:
(i) Whether firm A has a dominant strategy
(ii) Whether firm B has a dominant strategy
(iii) The Nash equilibrium if there is any.
What is a foreign exchange rate? (2) (a) The rate at which the currency of one country trades for the goods of another country. (b) The rate at which one country’s goods trade for those of another country. (c) The rate at which currencies of different countries are exchanged. (d) The rate at which one country’s currency trades for gold provided by another country
scientists reveal that consumption of oranges decreases the risk of diabetes and at the same time farmers uses a new fertiliser that makes orange tree more productive. state what effect this will have on equilibrium price and quantity
Five students share and apartment and all enjoy music equally. The marginal utility of each student is MU(Q) = 5 − 1 50 Q where Q is the number of CD’s in the apartment. Assume that a CD is a pure public good, namely it can be enjoyed but all and nobody in the apartment can be excluded from listening to it even if s(h)e has bought it. ) The cost of a CD is $4. What is the socially optimal number of CD’s in the apartment?
