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Q2.b. Suppose a firm has only three possible plant size options as shown in the accompanying figure. What plant size will the firm choose in producing (i) 50, (ii) 130, (iii) 160, and (iv) 250 units of output?
(v) Draw the firm’s long-run average cost curve on the diagram and describe this curve.
Everyone in society should be guaranteed the best health care possible. Discuss its quality and efficiency
I run a small café. I hire one helper at Rs.180,000 per year, pay annual rent of Rs.150,000 for the hotel and spend Rs. 100,000 per year on materials. I had to put in Rs.40,000 of my own funds in equipment (five tables, ten chairs and so forth) that could have earned me Rs.4,000 per year if alternatively invested. I have been offered Rs.250,000 per year to work for a competitor. I estimate my entrepreneurial talents are worth Rs.30,000 per year. Total annual revenue from restaurant sales is Rs.720,000. Calculate the accounting profit and economic profit for my cafe.
Let the production function by Q=AL^a K^b. Find the elasticity of production with respect to labour (L).
Suppose a particular consumer has 8 birr to be spent on two goods, A and B. The unit price of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from consumption of the goods is given below.
Quantity
1 36 30
2 24 22
3 20 16
4 18 12
5 16 10
6 10 4
A) Based on the cardinal analysis, what is the combination of the two goods that gives maximum utility to the consumer?
B) What is the total utility at the utility maximization level?
(30 marks) Consider a perfectly competitive market in the short run. Assume that market demand is P=1000 - Q. Denoting firm level quantity by q, assume TC=30q-10q2+q3 so that MC=30-20q+3q2.
a) If there are 10 identical firm in the industry in the short run, what is the market equilibrium price and quantity?
b) Do firms make a profit or loss in the short run, and how much are these profits/losses?
c) What is the equilibrium price in the long run?
d) What will be equilibrium profit in the long run?
e) How many firms will there be in the long run?
The situation in which a firm makes an economic profit is identified as one of the possible short-run positions of a firm under perfect competition. Illustrate the given short-run position and explain the situation with reference to your graph
4.3.1. Draw a graph to illustrate how a decrease in the price of Cremora will affect the equilibrium price and quantity in the market for milk. (6)
4.3.2. Explain how a change in the price of Nesquik can lead to the same effect in the market for milk as indicated in 4.3.1.
5.1.1. Use the ARC (midpoint) formula to calculate the price elasticity of demand for whiskey. (3)
5.1.2. Based on the calculated elasticity value in 5.1.1, indicate whether the demand in the market for whiskey is elastic or inelastic. (1)
5.1.3. Based on your answer in 5.1.2, illustrate the elasticity of demand in the market for whiskey. Clearly indicate the correct percentage changes in price and quantity on the elasticity graph. (4)
5.1.4. Explain how producers could increase total revenue given the calculated elasticity coefficient.
#340153 on Dec 2023