Microeconomics Answers

The Ministry of Industry and Trade wants to review the Youth Entrepreneurial Scheme (YES) implemented by the Ministry some five years ago.

(a) Develop a research question to address the impact of the programme in the national income, export trade, local employment and GDP growth.

(b) Outline your dependent variable (DV) and the independent variables (IV) from the research question.

(c) Construct a simple economic model and econometric model and identify the parameters to be estimated.

Identify factors that encourage firms to collude indirectly in an oligopoly market. Build a case study in the context of Bangladesh, or your resident country. 

The Cobb- Douglas production function is given by the form Y = A La Kb

Where, Y = Output (mt/day), L = Labour (hours/mt) K = Capita (Rs/mt). By taking the natural logarithm of each term in the function, that is LnY = LnA+aLnL+bLnK. Using a standard multiple linear regression model the parameters of the function were obtained as follows;

Ln Y = 4.45 +0.5LnL + 0.4LnK

(2.2) (0.01) (0.02)

The standard error for each estimated parameter is shown in parentheses below the estimate.

Construct equation for Cobb- Douglas production function and briefly explain the properties of this production function (4 marks)

Measure marginal product of labour and average product of capital when L=10 and K=5 (3 marks)

Is this production function exhibit the law of diminishing returns in the short run? (3 marks)

he fisherman has a fixed cost of Rs.10 (his rod). The variable cost of his time is Rs.5 per hour. Graph the fisherman's total-cost curve. Is this cost function exhibits the concepts of economic cost theory? If not, then why not?

Sandra lives in Anuradhapura and runs a business that sells mangos. In an average year, she receives Rs.3.6 million from sales of mangos. Of this sales revenue, she must pay the production and wholesale cost of Rs. 1,400,000. She also pays wages and utility bills totalling Rs. 1,100,000. If she does not operate this mango business, she can work in an accounting firm and receive a monthly salary of Rs. 70,000. She owns her showroom. If she chooses to rent it out, she will receive Rs. 5,000 in rent per month. Assume that the value of this showroom does not depreciate during the year. To commence the business, she has released Rs.1 million from her fixed deposit. The annual interest rate for her fixed deposit is 18%. No other costs are incurred in running this mango business. What is Sandra’s accounting profit (used for tax purposes)? What is her economic profit

What is consumer’s equilibrium? Explain the income effect in the consumer’s equilibrium

in normal and inferior good