Economics Answers

b. Sahar is analyzing the probability to open her own beauty salon. If she chooses to operate her own salon she would have to pay Rs. 70,000 p.m as rent and staff that would cost her Rs. 30,000 p.m and is expected to earn Rs. 150,000 p.m. While if she continues working as the head makeup artist in one of renowned salons of Karachi she would earn 120,000. Analyze the information above and find explicit and implicit cost.

b. Sahar is analyzing the probability to open her own beauty salon. If she chooses to operate her own salon she would have to pay Rs. 70,000 p.m as rent and staff that would cost her Rs. 30,000 p.m and is expected to earn Rs. 150,000 p.m. While if she continues working as the head makeup artist in one of renowned salons of Karachi she would earn 120,000. Analyze the information above and find explicit and implicit cost.

a. The shareholder of Al-Karam wants to maximize his profits by selling his goods in the larger quantities. In order to achieve his target (s) he hired a manager to look after his business. However, the manager instead of maximizing business profits started maximizing his own interest by selling the designs in black to the competitor’s designers. Analyze the above situation and explain the possible problem that might occur for Al-Karam.

b. Sahar is analyzing the probability to open her own beauty salon. If she chooses to operate her own salon she would have to pay Rs. 70,000 p.m as rent and staff that would cost her Rs. 30,000 p.m and is expected to earn Rs. 150,000 p.m. While if she continues working as the head makeup artist in one of renowned salons of Karachi she would earn 120,000. Analyze the information above and find explicit and implicit cost

The shareholder of Al-Karam wants to maximize his profits by selling his goods in the larger quantities. In order to achieve his target (s) he hired a manager to look after his business. However, the manager instead of maximizing business profits started maximizing his own interest by selling the designs in black to the competitor’s designers. Analyze the above situation and explain the possible problem that might occur for Al-Karam.

Suppose the firms in a competitive industry face pandemic safety costs that take the form of $S per period. In the long run does this lead to an increase in market prices in this industry?

True or false : A small business that takes a government loan designed to help it stay open during the pandemic bears the interest cost of the loan, while a similar small business that uses its owner’s funds for a similar purpose bears no similar costs for it to stay open.

What is the relationship between the marginal product and marginal cost curves?

A2-6. Suppose the output (q) produced by different amounts of labour (L) hired by a firm is given below:
Labour 0 1 2 3 4 5 6
Quantity 0 3 9 18 24 27 28


(d) Suppose this firm operates in a perfectly competitive market where the market price is $4.00 per
unit of output. How many units will the firm produce? What if the market price is $12.00? What
if the market price is 36.00? [5]
(e) Assume that the short-run cost curves are drawn for the long-run efficient plant size and that all
firms in the industry are identical. Are any of the market prices from part (d) a long-run
equilibrium price? Explain. [5]

(just answer e)

Given the following demand and supply function answer the following questions:
​​Qd= 300-20P​​​Qs= -100+20P
a. Find the equilibrium quantity and price and illustrate the same on a graph. Also, explain if it is static or comparative equilibrium.
b. Suppose the price is fixed at Rs. 5, now find if the market is in equilibrium or not? Illustrate it graphically also and explain about the demand and supply.
c. Suppose the price is fixed at Rs. 15, now find if the market is in equilibrium or not? Illustrate it graphically also and explain about the demand and supply.
d. Suppose the good in question is normal explain the effect of increase in the consumer income on the equilibrium. Also, explain if it is static or comparative equilibrium with the reference to your answer in part a.