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What is profit maximization
Due to substantial increase in prices of country A , the real income level of the population in country A decreases. Show on a diagram how the increase in the income level country A will affect the demand for meat which is a natural good . Also indicate how the equilibrium price and equilibrium quantity of meat will increase in country A (5) marks.
A gamble gives 25% probability of R50, 50% probability of R100 and 25% probability of nothing. A risk neutral (U(x)=x) RDU decision maker has probability weighting function: w(p)=p^1.5. Whatprobability weight would she use for the R50 outcome?
a. ~0.25
b. ~0.125
c. ~0.30
d. ~0.5
A decision maker has utility function 2lnW. What can we conclude about her relative risk aversion?
a.she has decreasing relative risk aversion
b.she has constant relative risk aversion
C.she has increasing relative risk aversion
Although the economy was in the Great Depression, the Hoover administration followed a fiscal policy of balancing the budget. A Keynesian would have found this policy
A. inappropriate, because it probably would have inflationary
consequences that might serve to further the people's
reluctance to hold money.
B. appropriate, because it probably would have led to a significant increase in the money supply and thereby increased employment.
C. appropriate, because it probably would have stimulated economic activity and helped end the depression.
D. appropriate, because a balanced budget is always appropriate.
E. inappropriate, because it probably would further depress
aggregate demand, economic activity, and employment.
Which of the following is/are correct?
(X).Your spouse cleans your house every Thursday.
(Y).You sell your old economics book for $25.
(Z).Your economic textbook is revised and you buy a new edition.
A. All three events increase GDP.
B. Only (X) increases GDP
C.Only (Y) increases GDP
D. Only (Z) increases GDP
E. (X) and (Y) increase GDP, (Z) reduces GDP
On day 1, it cost $.7354 U.S. to buy one Canadian dollar. How many Canadian dollars would $1 U.S. buy?
A. 1.36 B. 1.27 C. 1.11 D. 0.84 E. 0.73
The marginal cost of producing the Kindle is estimated at $126 per unit. Apply the MR = MC rule to find the output and price that maximize Kindle profits.
Considering that each Kindle sold generates $100 in e-book profits, determine Amazon’s optimal quantity and price with respect to the total profit generated by Kindle and e-book sales. What is the implication for Amazon’s pricing strategy?
Suppose the price elasticity of demand for a basket of fruits is -5.0. You are currently charging $42 per basket. If you want to increase the quantity of fruit baskets sold by 20 percent, you should charge a price equal to $_____. Use midpoint formula.
Consider the markets for film-streaming services, TVs and cinema tickets.
a For each pair, identify whether they are complements or substitutes.
– film-streaming services and TVs
– film-streaming services and cinema tickets
– TVs and cinema tickets
b Suppose a technological advance reduces the cost of manufacturing TVs. Draw a diagram to
show what happens in the market for TVs.
c Draw two more diagrams to show how the change in the market for TV screens affects the
markets for film-streaming services and cinema tickets.
