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does an expensive necklace has same elasticity as an exquisite painting to be sold at an auction?
Vishaka and Vaishali are shopping for antique jewellery. Vishaka’s
demand function for antique jewellery is Q = 30 - 3P, and Vaishali’s demand
function is Q = 48 - 4P. What will their combined market demand be if the
price is Rs 5?
Suppose we have a production function for wheat
Q = 𝐾𝐿 − 0.8K2 − 0.2𝐿
2
A. Given K = 10 Units, calculate the level of labour that the AP reaches max and how
much wheat is produced at that point
B. Given K = 10 at what level of labour output reaches maximum
C. How much level of labor should the company hire in order to be efficient
3. Suppose a firm operating in a perfectly competitive market has a cost structure given by TC =
10 q – 4q2 + 4 q3
and further assume the market demand curve is given by Qd = 2000-25P and
if there are 500 firms in the market supplying similar product with individual supply curve of
Qs= 3 +0.05P, then
A. The equilibrium price in the market
B. Determine the profit maximizing output
C. Determine the break-even price
D. What minimum market price the firm needs to continue production?
Q=2 TC=100
Q=3 TC=120
How much is FC?
Suppose a consumer has income of 200 birr per month and he wants to spend all of his income on two
goods, X and Y, whose prices are birr 4 and birr 5 respectively. Based on this information answer the
following questions:
A. Express the budget line of the consumer both algebraically and diagrammatically.
B. Compute the equation of the budget line.
C. Determine the slope of the budget line and interpret the result
- Examine the view that the best allocation of resources, from society’s point of view, occurs where the marginal private benefit equals the marginal private cost.
Please show all working out and explain
There are two riskless bonds which mature at t = 2. The first is a zero coupon bond that pays a balloon of $ 1,200. The other is a coupon bond with an annual coupon of $100 and a balloon payment of $990. The current yield on a riskless bond that mature in one year is 10%, the annualized yield on a two-year bond is also 10%.
(i) What is the duration of the zero coupon bond? And of the coupon bond? Explain its economic meaning.
(ii) Suppose the interest rate at t = 1 is 8%. Find the percentage price change for the zero coupon bond. Suppose next the interest rate at t=1 is 12%: find again the percentage change for the coupon bond. Compare the findings obtained in the two cases and explain them.
(iii) Compute then the percentage change for the coupon bond when the interest rate at t = 1 is 8% and then when it is 12%. Compare with the result obtained in the previous point (ii) and discuss.
explain the difference between the concepts of pareto optimality and pareto improvement ,if policy change moves the economy from pareto situation to a non pareto optimal situation ,does this imply a deterioration in social welfare ?explain your answer and illustrate it with an Edgeworth box diagram .
The price of ABC shoe is $50. What are the company’s profits? In case of loss, should
the CEO continue operations or decide to shut-down? Which would be a wise decision?
Explain. (1 Mark)
d. The chief financial officer tells the CEO that it’s better to produce only one shoe this
month. What could be the reason for this advice by the CFO? What are the firm’s profits
at that level of production? Is this the best decision? Explain. (1 Mark)
