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A. marginal revenue is always equal to marginal cost
B. Marginal revenue is always equal to the price of the product.
C. Average revenue is always equal to the price of the product.
D. Average revenue is always equal to the marginal revenue.
2. Suppose the market demand for a cup of cappuccino is given by QD =24 - 4P and the market supply for a cup of cappuccino is given by QS = 8P – 12, where P = price (per cup).
a. Graph the supply and demand schedules for cappuccino.
b. What is the equilibrium price and equilibrium quantity?
c. Calculate consumer surplus and producer surplus, and identify these on the graph.
James Walker allocates his budget of $ 24 per week among three goods, A, B and C. Use the following tables of quantities (Q) and total utilities (TU) to answer the questions below:
QA TUA QS TUS QC TUC
1 50 1 75 1 25
2 90 2 135 2 45
3 120 3 175 3 60
4 140 4 205 4 70
5 155 5 225 5 77
i. If the price of A is $2, the price of B is $3, and the price of C is $ 1, how much of each does James Walker purchase in equilibrium?
ii. If the price of A rises to $ 4 while other prices and James Walker budget remain constant, how much of each does he purchase in equilibrium?
iii. Use the information from part (i) and part (ii) to draw the demand curve for good A. Be sure to indicate the quantity demanded for each point on the curve.
You win Rs 10,000 in a horse race. You have a choice between spending the money now and putting it in a 5% FD. What is the opportunity cost of spending the Rs 10,000 now?
a) Why were the members of OPEC trying to agree to cut production?
b) Why do you suppose OPEC was unable to agree on cutting production? Why did the oil market go into à ¢ turmoilà ¢ as a result?
c) The newspaper also noted OPECà ¢ s view à ¢ that producing nations outside the organization, like Norway and Britain, should do their share and cut production.à ¢ What does à ¢ do their shareà ¢ suggest about OPECà ¢ s desired relationship with Norway and Britain? (10Marks)
Hours Quantity of Fish (Kg)
0 0
1 10
2 18
3 24
4 28
5 30
10. What is the marginal product of each hour spent fishing. (15Marks)
11. Use these data to graph the fisherman’s production function. Explain its shape. (15Marks)
12. The fisherman has a fixed cost pf $10 (his pole). The opportunity cost of his time is $5 per hour. Graph the fisherman’s total cost curve. Explain its shape. (15Marks)
Define Monotonic Preferences?
