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Identify whether each statement is positive or normative.
The unemployment rate is 8.2%
8.2%.
At 8%
8%, unemployment in the United States is too high.
The richest 1%
1% should be paying more in taxes.
The richest 1%
1% of the population earn 24%
24% of the total income.
Answer Bank
positive
normative
Consider a producer facing the following cost function MC(q,w)=100+q Assuming the fixed cost are 5000 and rhe output price is 100 find maximum profit
Calculate the market for ponche an alcoholic wine.the demand is characterized by the following equation pd=100-Qd.the supply is given by Ps=0.25Qs
a.Determine the equilibrium quantity and price
b.suppose an ad valorem tax of 100% is imposed on buyers of the wine ,graphically sketch the behaviour of the demand and supply curve.
c.what is the new equilibrium price and quantity?
what are the price that buyers will pay and suppliers will get? Also determine the tax revenue and tax incidence on the buyers and seller
If a 10% decrease in the price of one product that you buy causes an 8% increase in quantity demanded of that product, will another 10% decrease in the price cause another 8% increase (no more and no less) in quantity demanded?
1. What is the importance of looking at the “marginal units” in evaluating economic behavior such as consumption and production behaviors?
1. What is the importance of looking at the “marginal units” in evaluating economic behavior such as consumption and production behaviors?
Q6. Based on the following case study answer the given questions:
Food prices often rise or fall with good or bad harvests or because of a change in demand. A recent example is the price of Brazil nuts, which by May this year had risen over 60% on European markets. Part of the reason for the price rise has been on the demand side. Consumption of Brazil nuts has increased as more people switch to healthier diets. This includes the purchase of the nuts themselves and as part of healthier snack foods. With supply being relatively inelastic, any rise in demand tends to have a relatively large effect on price.
A more acute reason is on the supply side. There has been a very poor harvest of Brazil nuts. The nuts are grown largely in the Amazon basin which has been hit by drought linked to the El Nino effect. This, however, is only a temporary effect and future harvests should increase again as rainfall returns to normal. However, in the longer term, rainfall patterns may change with the effects of global warming.
Questions:
A. Explain the supply conditions of Brazil nuts as discussed in the above case with the help of diagrams)
B. What determines the price of Brazil nuts?
C. Explain with the help of curves the changing conditions of demand with the help of diagram.
what is demand
. if Qd = a/b - cP and Qs = d/e + fP, in market equilibrium (Qd = Qs) what is P, Qd and Qs?
Suppose that business travelers and tourists have the following demand for airline
tickets from Lahore to Karachi.
price Quantity demanded
(business travelers)
Quantity demanded
(tourists)
$150 2100 1000
200 2000 800
250 1900 600
300 1800 400
As the price of ticket rises from $200 to $300, what is the price elasticity of demand for
(i) Business travelers
(ii) Tourists
(Use the midpoint method in your calculations.)
