Economics Answers

1. Why would a firm that incurs losses choose to produce rather than shut down?

2. Explain why the industry supply curve is not the long-run industry marginal cost curve.

3. In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?

4. What is the difference between economic profit and producer surplus?

5. Why do firms enter an industry when they know that in the long run economic profit will be zero?

Imagine that the government unexpectedly introduces a capital income tax τ;

that is, net capital income becomes r(t) = (1 − τ)fk(k(t)). Also assume that

the tax revenues are used for unproductive government purchases. How does

this policy change the balanced growth path?

TR= 75Q-4Q^2

Find AR and MR function?

At what level of output and price MR is zero?

Use the production function Q=10K0.5 L0. 6 to complete the following production table.

Rate of capital input (K)

6 24.5. 56.3. 71.8

5

4. 30.3

3. 45.5

2. 27.3

1. 10.0. 29.3

1. 2. 3. 4. 5. 6

a) For this production system, are returns to scale decreasing, constant, or increasing? Explain

A firm operates in a perfectly competitive market. The market price of its product is 4 br and the total cost function is given by TC = 200Q + 50, where TC is total cost and Q is level of output

What level of output should the firm produce to maximize the profit

Select and examine any two economic systems that you think affect businesses most in South Africa. 

Give five reason

Examine the major types of unemployment and the need for such categorization???

5. Consider the demand and supply functions for the notebooks market.

𝑄𝐷=10,000−100𝑝 𝑄𝑆=900𝑝

a. Make a table with the corresponding supply and demand schedule.

b. Draw the corresponding graph.

c. Is it possible to find the price and quantity of equilibrium with the graph method?

d. Find the price and quantity of equilibrium by solving the system of equations.

6. Supply and demand functions show different relationships between the price and quantities supplied and demanded. Explain the reason for that relation.

1. Consider the market supply curve which passes through the intercept and from which the market equilibrium data is known, this is, the price and quantity of equilibrium 𝑷𝑬=𝟓𝟎 and 𝑸𝑬=𝟐𝟎𝟎𝟎.

a. Considering those two points, find the equation of the supply.

b. Draw a graph of this line.

2. Considering the previous supply line, determine if the following demand function corresponds to the market demand equilibrium stated above. 𝑸𝑫=𝟑𝟎𝟎𝟎−𝟐𝒑.

3. The production function of a firm is described by the following equation 𝑸=𝟏𝟎,𝟎𝟎𝟎𝑳−𝟑𝑳 𝟐 where L stands for the units of labor.

a) Draw a graph for this equation. Use the quantity produced in the y-axis and the units of labor in the x-axis.

b) What is the maximum production level?

c) How many units of labor are needed at that point?

4. Solve the following system of equations.

50𝑥+20𝑦=1800 10𝑥+3𝑦=300

Explore transport as service and industry within the South African economy.