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a) Compare diminishing marginal returns and diseconomies of scale?
b) Use a numerical example to show that increasing returns to scale can co-exist with diminishing marginal return. Make sure you explain how your example answers the question.
c) What are the two components of a firm’s cost in the short run, and what are their definitions?
d) How do the marginal and average products of labour affect a firm's marginal and average variable costs in the short run?
e) What does a firm's short-run total product curve show and what is its significance?
Question 2 /20/
a. Mention any 5 concepts used interchangeably with:
i. Lending rate. (5)
ii. Strict monetary policy (5)
iii. Accommodative monetary policy (5)
b. Mention the types of inequality that were seen most during the period of hard lockdown in South Africa. (5)
Suppose the market for agrochemicals has a supply
Sx=30+A and the demand curve of Dq=240-2q assume that the market is perfectly competitive what would the equilibrium price and quantity be?
The output of a brick maker can be determined by the following production function:
B=K0.75L0.25
Where:
B =number of bricks produced in a given period
L= amount of labour employed
K= amount of capital employed.
If the price of capital is PK, the price of labour is PL and the firm’s total expenditure is E,
i.State the firm’s optimization problem.
ii.Set up the Lagrangian function based on the information provided.
iii.Obtain the first order conditions for optimization.
iv.Derive the optimum combination of inputs.
v.If the price of capital is P20, the price of labour is P30 and the brick maker’s total expenditure on inputs in P120, calculate the firm’s output maximizing input combination.
vi.How may bricks will the brick layer produce in a given period?
Use the production possibility curve (PPC) to answer the question. If Zambia is currently on PPC1,
then point-------------will be an efficient use of resources, while point------------will be unattainable.
In microeconomics, we expect the supply curve for the firm to slope upward to the
right when drawn against price. The classical aggregate supply curve is based on
this microeconomic theory of the firm but is vertical. Why?
A competitive firm has the short-run cost function C(y) = 12y3 - 8y2+30y+12. At what price will the firm agree to produce in the short-run? What is the shutdown condition for this firm?
Suppose the GDP per capita (income) has increased from $5000 to $10,000, whereas the demand for luxury apartments has increased from 1000 to 2000, whereas the demand for burgers has increased from 10,000 to 12,000. Calculate the income elasticity of demand for apartments and burgers
a. Mention any 5 concepts used interchangeably with:
i. Lending rate. (5)
ii. Strict monetary policy (5)
iii. Accommodative monetary policy (5)
b. Mention the types of inequality that were seen most during the period of hard lockdown in South Africa
1. An individual seller’s monthly supply of downloadable e-books is given by the equation
Qseb = −6.45 3.7Peb – 7.5W
where Qseb is number of e-books supplied, Peb is the price of e-books in euros, and W is the wage rate in euros paid by e-book sellers to laborers. Assume that the price of e-books is €10.68 and wage is €10. The supply side of the market consists of a total of eight identical sellers in this competitive market.
a. Determine the market aggregate supply function.
b. Determine the inverse market supply function.
Determine the slope of the aggregate market supply curve.
