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A production function has the following form Q = 4KL. Price of labor is PL = 8 and price of capital is PK = 4. How many units of labor and capital the firm hires, if it minimizes its costs and its goal is to produce 800 units of output? Calculate total costs.
Natalie entered a raffle recently and never checked her tickets. She has recently learned the exact number of the other unchecked tickets. Based on this information she knows that there is a 40% chance that she has won the raffle prize of $1,600. If she does not win the raffle her wealth will be zero. Natalie has a von Neumann–Morgenstern utility such that she wants to maximize the expected value of √c, where 𝑐 is total wealth.
What is the minimum price for which Natalie would sell her raffle tickets?
Good X is produced in a competitive market using input A. Explain what would happen to the supply of the good X in each of the following situations:
a) The price of input A decrease.
b) An excise tax of $3 is imposed on good X.
c) An ad valorem tax of 7percent is imposed on good X.
Breifly discuss the factors that determine demand for an insurance policy and how they different then normal determinant demand of a commodity?
A consumer has a utility function . The prices of and are 3$ and 4$, respectively and his income is 70$. Find the demand bundle at these prices?
Assume a consumer has $40 to spend and for both products the marginal utilities are shown in the following table: Quantity MUA MUB 1 35 80 2 20 40 3 12 18 Assume that each product sells for $10 per unit. a) How many units of each product will the consumer purchase? b) Assume the price of product B rises to $20 per unit. How will this consumer allocate her budget now? c) If the prices of both products rise to $20 per unit, what will be the budget allocation
The difference between what a product is willing to sell for a unit of a good and what must be received when actually selling it is called...
1 deadweight loss
2 net loss
3 producer surplus
4 consumer surplus
20. Given the electricity shortages observed in Durban in 2019, the South African government wants
to reduce electricity consumption by 5%. The price elasticity for electricity is 0.4, therefore
government should
(4 Marks)
a) Increase the price of electricity by 12.5%
b) Decrease the price of electricity by 2%
c) Increase the price of electricity by 10%
d) Decrease the price of electricity by 6%
Suppose that citizens of South Africa are advised by health authorities on the health benefits of consuming fresh ginger.
demonstrate and explain using a clearly labelled diagram, the effects of this information on the equilibrium price and equilibrium quantity of fresh ginger
Demonstrate graphically, the effect of the increase in the intercept of the demand function in (b) above on the equilibrium quantity and price. What generalization can you come up with from the resulting graphical analysis?
