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The current world production of oil is 350 million barrels per day and the current world price of oil is N$850 per barrel. The price elasticity of demand is -0.3 and the elasticity of supply is 0.1. Shiwa Investment is planning to enter the world oil market with a daily production of 13 million barrels of oil per day. For simplicity, assume that the supply and demand curves are linear. Calculate market price and total supply of oil after Shiwa investment has enter the world oil market and explain why the total supply of oil increases with less that 13 million
6. Consider an economy that produces and consumes Bread and Automobile. Data for two
different years 2005 and 2010 is given in the following table.
Year 2005 2010Price of Automobiles $ 5000 $ 6000Price of a loaf of bread $10 $20Number of automobiles produced 100 120Number of loaves of bread produced 500,000 400,000
As Uber fares rise (for instance, during surge pricing), the number of drivers willing to work also rises. This is an example of the
1-Income effect of labor supply.
2-Substitution effect of labor demand.
3-Income effect of labor demand.
4-Substitution effect of labor supply.
Suppose a two-person household provides two products: taxi rides and meal deliveries.
Person A can provide 4 taxi rides or 2 meal deliveries in an hour.
Person B can provide 5 taxi rides or 4 meal deliveries in an hour.
Who has the absolute advantage in the provision of taxi rides? Who has the comparative advantage in the provision of taxi rides?
1-Absolute advantage: Person B
Comparative advantage: Person A
2-Absolute advantage: Person A
Comparative advantage: Person B
3-Absolute advantage: Person A
Comparative advantage: Person A
4-Absolute advantage: Person B
Comparative advantage: Person B
A 2013 study in NYC showed that Uber was a substitute for taxis. If consumers substitute Uber elastically relative to the price of taxi rides, then we should expect the cross-price elasticity of Uber rides with respect to the price of taxi rides to be
A-Positive and less than one.
B-Negative and greater than one (in magnitude).
C-Negative and less than one (in magnitude).
D-Positive and greater than one.
E-All of above
suppose the government levles an excise tax of $3.00 per pack on cigarette buyers. Draw after-tax curve and the tax revenue that will be collected by the government.
The current world production of oil is 350 million barrels per day and the current world price of oil is N$850
per barrel. The price elasticity of demand (ε) is -0.3 and the elasticity of supply (η) is 0.1. Shiwa Investment
is planning to enter the world oil market with a daily production of 13 million barrels of oil per day. For
simplicity, assume that the supply and demand curves are linear
Calculate market price and total supply of oil after Shiwa investment has enter the world oil market and
explain why the total supply of oil increases with less than 13 million.
The law of diminishing returns or variable proportion is only applicable in the
Assume the following production function for maize: Q=3K^1.2 L^0.5, where Q is the number of bags of maize produced, K is the units of capital used and L the units of the labour employed.
(a) Derive the MRTS of K and L.
(b) Estimate the factor intensity of the production function and interpret results.
(c) Is the above production function characterized by decreasing returns of scale? Explain
Consider the production function Q = 2(KL)0.5
a) What is the marginal product of labour and capital (1 marks)
b) What is the marginal rate of technical substitution of labor for capital (2 marks)
c) What is the elasticity of substitution at a point K = 1, L = 1 if we increase K by one unit? (2 marks)
