Economics Answers

Question Four [10 marks]
A firm uses the inputs of fertilizer, labor, and hothouses to produce roses. Suppose that
when the quantity of labor and hothouses is fixed, the relationship between the quantity of
fertilizer and the number of roses produced is given by the following table:
Tons of fertilizer /
month
No of roses/ month Tons of fertilizer /
month
No of roses/ month
0 0 5 2500
1 500 6 2600
2 100 7 2500
3 1700 8 2000
4 2200
(Hint, write out the average and marginal product for each ton of fertilizer)
a) What is the average product of fertilizer when 4 tons are used? (2m)

e) What is the efficient level of output it must produce at?

1. Given that price of an orange is GHC 1 and the calculated value of price elasticity of demand for an orange is -2.08.



a. Clearly state and explain the type of elasticity and the meaning of the value of price elasticity (-2.8). Illustrate with appropriate diagram.

Which of the following pairs of goods, are substitutes and which are complements? Explain.
1.Insulation and heating oil.
2.Hot dogs and mustard.
3.Television sets and videocassette recorder.
4.Rice and potatoes.

1. A $4,000 , 12% bond will be redeemed on
May 1,2008. Interest is payable semiannually
on May 1 and November 1.
Find the purchase price of the bond if the date of purchase is May 1, 1998 and
the yield rate is 10% compounded semi-annually.

With the aid of illustrations discuss the relationship between a firm’s total revenue curve and demand curve

explain diagrammatically, If the current pandemic (corona) is a negetive demand side shock, how the economy enters the short run equilibrium and will transition back to long run equilibrium (explain movement of shift curve). list and discuss two basic cause of recession.

Draw and explain the circular flow of income assuming that the economy is closed and there is the existence of government. What is the effect of adding a foreign sector? (25 marks)

Following the rise in the price of gasoline, it has been reported that fuel consumption falls by more than the number of vehicle trips. How could this have come about?[6]

Q1. KEY QUESTION How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts?a. Demand increases and supply decreases
b. Demand increases and supply constant
Please answer with example and graph.

How will change in demand and or supply affect equilibrium price and equilibrium quantity in competitive market do price and quantity rise or fall or remain unchanged or are the answer undetermined because they depend on magnitude of shifts?
Use supply and demand diagram for answer
A=demand decrease and supply increase?
B= demand increase and supply constant