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Problem 2. Amy has $20 a week to spend on coffee and coke. The price of coffee is $4 a cup, and the price of cake is $2 a slice.
1. Calculate Amy’s real income in terms of cake, calculate the relative price of cake in terms of coffee.
2. Calculate the equation for Amy’s budget line (with cups of coffee on the left side).
3. If the price of cake doubles while the price of coffee remains at $4 a cup and Amy’s income remains at $20, describe the change in her budget line.
1. Explain why, if Cindy equalized the marginal utility per hour of golf and tennis, she would not maximize her utility.
2. Cindy’s tennis club raises its price of an hour of tennis to $10. The price of golf remains at $10 an hour and Cindy continues to spend $70 on tennis and golf. List the combination of hours spent playing golf and tennis that Cindy can now afford.
3. Cindy loses her math tutoring job and the amount she has to spend on golf and tennis falls to $35 a month. How does Cindy’s demand for golf change? For Cindy, is golf a normal good or an inferior good? Is tennis a normal good or an infinite good?
The following day shows the relationship between the price and quantity demanded at four different prices for a product:Using the midpoints formula what is the price elasticity of demand between a) $11 and $9 ; (b)$9 and $7 ; (c) $7 and $5
What according to Keynes are the components of aggregate demand? Describe how equilibrium output is determined in the simple Keynesian model
Suppose that the firm operates in a perfectly competitive market. the market price of its product is $2.the firm estimates its cost of production with the following cost production with the following cost function: C=100-6Q+2Q2
Based on this information, answer the following question.
A.what is the total fixed cost for 4 unit of output?
B.what is MC when the firm produces 4 unit of output?
C. What is the value of AFC at 4 units of output?
D.what is total variable cost for 4 unit of output?
E.What level of output should the firm produce to maximize its output?
Assume that the total cost of a competitive firm is given by,TC=6Q2-16Q+12, and the total revenue of the firm is given by, TR=2Q2
Then find
A.The firms profit maximization level of output.
B.Profit
C.does the firm generate profit or incur loss at 5 unit of output?
A tax system is progressive if …
The first principle of economics discussed in Chapter 1 of Mankiw’s book is that
people face trade-offs. Use a production possibilities frontier to illustrate society’s trade-
off between two “goods”—a clean environment and the quantity of industrial output.
What do you suppose determines the shape and position of the frontier? Show what
happens to the frontier if engineers develop a new way of producing electricity that emits
fewer pollutants.
Da Silva and Ehlers decided to admit Fischer as from 1 January 2018 as a partner under the following terms and conditions.
Fischer will receive 1/5 of profits and losses
Da Silva will contribute in the ratio 2:1 toward Fischer s 1/5 profit share
Fischer must pay N$180 0000 for her 1/5 share in the partnership s assets.
The assets of the partnership were re - valued on 1 January and the revaluation account revealed a surplus of N$60 000.
Required:
Calculate the new profit sharing ratio after the admission of Fischer.
1. One of the most difficult tasks in regression analysis is to obtain the data suitable for quan-
titative studies of this kind. Suppose you are trying to estimate the demand for home fur-
niture. Suggest the kinds of variables that could be used to represent the following factors,
which are believed to affect the demand for any product. Be as specific as possible about
how the variables are going to be measured. Do you anticipate any difficulty in securing
such data? Explain.
