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Given a total cost function,
TC(Q) = Q
2 + 10Q + 100
where Q represents quantity of output produced.
(i) Find the expressions for the variable cost, fixed cost, average cost, average variable cost,
and average fixed cost. 5
(ii) At what output level (Q) is the average cost lowest? Also find the minimum average cost.
why the law of diminishing returns applies only in the short-term period
suppose capital (k) and labour (L) are the only inputs of production with r(=12ghc) and w(=10) as the respective reward.
a. Derive the total cost function. Tc = 10k + 2L
TC = p*q
b. Derive the total revenue function if q=2Lk-k2-3L2+3k
c. Derive the profit function.
For the following industries, identify factors used in those industries that in the short run are (i) fixed; (ii) variable. a. Spanish La liga b. Michelin star restaurant. 3. Distinguish between an inferior good and a Giffen good. This can be done intuitively or graphically using indifference curves. 4. Indicate what the profit maximizing condition is for? a. A Perfect competitive firm b. A Monopolist c. Show graphically the profit maximizing condition in part a, and b. d. Explain intuitively the profit maximizing condition in part a, and b.
Fill in the blanks in the following table using the values given in some of the cells. The table shows labour inputs (Lb) and outputs (Y) for a firm. Suppose that just one input, Labour, is changing and that we are holding capital fixed. (Hint: To compute total output when labour input (Lb) = 2, note that APP=200. Hence, total output (Y) = Lb * APP = 400; now, knowing that total output increased from 150 to 400 when labour input increased from 1 to 2, you can compute the MPP between 1 and 2 = 400 - 150 = 250 …. and so on). Quantity of Labour Input (Lb) Total output (Y) Marginal Physical Product (MPP) Average Physical Product (APP) 0 0 - 1 150 2 200 200 3 4 760 150 5 6 150
Suppose that the real money demand function is 𝐿(𝑌, 𝑟 + 𝜋 𝑒 = 0.3𝑌 𝑟 + 𝜋 𝑒 Where Y is real output, r is the real interest rate, and πe is the expected rate of inflation. Real output is constant over time at Y = 1500. The real interest rate is fixed in the goods market at r = 0.5 per year. (a) Suppose that the nominal money supply is growing at the rate of 10% per year and that this growth rate is expected to persist for ever. Currently, the nominal money supply is M = 400. What are the values of the real money supply and the current price level? (Hint: What is the value of the expected inflation rate that enters the money demand function?). (10) (b) Suppose that the nominal money supply is M = 400. The Bank of Namibia announces that from now on the nominal money supply will grow at the rate of 5% per year. If everyone believes this announcement, and if all markets are in equilibrium, what are the values of real money supply and the current price level? (10) .
Suppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services.Page 14 of 15 (a) Find out the equilibrium value of income. (4) (b) What is the value of export multiplier? (2) (c) If the equilibrium national income is less than the full-employment level of income by N$100, what should be the increase in government spending or in exports to attain the full-employment level of income? (6) (d) With a help of a diagram explain and discuss life cycle hypothesis.
A bond promises to pay N$150 in one year. 3.1 (a) What is the interest rate on the bond if its price today is N$65? N$75? N$85 (6) (b) What is the relationship between the price of the bond and interest rate? (4) (c) If the interest rate is 15%, what is the price of the bond today (4) 3.2 With a help of diagram explain the effect of an increase in the interest rate on output. (6) 3.3 explain the relationship between money multiplier and reserve ratio; and money multiplier and currency- deposit ratio
Given the following information, what quantity is profit-maximizing for a Monopolist? Explain your answer.
Quantity
Marginal Revenue
Marginal Cost
1
$162
$90
2
$142
$80
3
$122
$70
4
$102
$60
5
$82
$70
6
$62
$80
7
$42
$90
A consumer dislikes burgers but loves coke. If she offered by someone a burger or coke
she might drink coke but waste burger.
