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2) Suppose our duopolists face the market demand: P = 100 – 0.5 Q. The cost
function for firm 1 is TC1 = 5q1 and for the firm 2, it is TC2 = 0.5(q2)
2. (15 marks)
Using this information find equilibrium price, quantities, and profits if:
a. Duopolists were to behave as perfectly competitive firm
using the graph expalin why elasticity of demand will be greater bewteen 15 and $9 opposed tombewtween $9 and $4. prove this is true
Question No. 6
The first principle of economics discussed in Chapter 1 is that people face tradeoffs. Use a production possibilities frontier to illustrate society’s tradeoff between a clean environment and high incomes. What do you suppose determines the shape and position of the frontier? Show what happens to the frontier if engineers develop an automobile engine with almost no emissions.
Use diagrams to illustrate each of the following:
(i) the equilibrium of a consumer (consumer satisfaction or utility is
maximized) using indifference theory
(ii) how the demand curve for one product is derived for a consumer using her
indifference map.
If the government puts a $2 excise tax on a product and as a result, price rises by $1.75, how much will the seller or buyer pay??
Explain, with the aid of a graph, what will happen to the exchange rate between the rand and the dollar if more South African residents purchase shares in American companies. Also comment on the impact on the equilibrium quantity of dollars.
Two former Northwest University students work in investment banks with salaries of 560,000 each for 2 years after they graduate. together they saved s50,000. after 2 years, they decided to quit their job and start a website designing business. they used the 50,000 to buy computer equipment, tables and chairs. for the next 2 years, they earn s40,000 annually, pay themselves s10,000 annually, and rent an office for s18,000 per year,. Prior to the investment, their S50,000 was in bonds with 10 percent interest. are they now getting economic benefits? explain your answerConsider a firm that uses capital and labor as inputs and sells 5,000 units of output per year at the prevailing market price s10. also assumes that the total labor cost for the firm is s45,000 per year. further assume that the company's total capital stock is currently worth 100,000, that the return available to investors with comparable risk is 10 percent per year, and that there is no depreciation. is this a profitable company? explain your answer
