Economics Answers

D = 50 - 0.5P and S= 20 + 0.25P

Calculate Quantity Demanded when price is 10
Calculate Quantity Demanded when price is 20
Calculate the equilibrium prices and quantities
Calculate the Shortage / Surplus if government imposes a regulatory price of Rs. 60

discuss how the exchange rate policies of the dominant economies in the three regions (SADAC, AEC, and COMESA) have affected crossborder trade. Substantiate your discussion with examples.

3. The market for bananas, muffins, and coffee are interrelated, and each market is
perfectly competitive.
a. In the market for bananas, the equilibrium price is $1.00 per pound, and the
equilibrium quantity is 1000 pounds per week. Suppose the government imposes a price
floor on bananas at $1.20 per round causing the quantity supplied to increase to 1500
pounds per week.
i. Would the price floor result in a shortage, a surplus, or neither? Explain.
ii. Calculate the price elasticity of supply if the price increases from $1 to
$1.20. Show your work.
iii. Between $1 and $1.20, is the supply elastic, unit elastic, or inelastic?

5. The demand and total cost equations for the output of a monopolist are
Qd = 90 - 2P, TC =Q3 - 8Q2 + 57Q+ 2w
i. Find the firm’s profit-maximizing output level.
ii. What is the profit at this output level?

Suppose further that the monopolist’s total cost of production function is given by the equation TC = 2Q2
Find the output level that will maximize profit.
i. Determine the monopolist’s profit at the profit-maximizing output level.
ii. What is the monopolist’s average revenue (AR) function?
iii. Determine the price per unit at the profit-maximizing output level.
iv. Suppose that the monopolist was a sales (total revenue) maximizer.
v. Compare the sales maximizing output level with the profit-maximizing output level.//
vi. Compare total revenue at the sales-maximizing and profit-maximizing output levels.

Discuss whether a government should encourage an increase in savings

George's household can produce Nachos and Burgers as described by the following PPF:

5N + 7B = 50

The price of Nachos is 300. Solve for the price of Burgers (round to the nearest integer).

George's household can produce Nachos and Burgers as described by the following PPF:

5N + 7B = 50

The price of Nachos is 300. Solve for the price of Burgers (round to the nearest integer).

The processing of Q online orders can be done using hours
of robot time (denoted by K) and hours of human time
(denoted L). The processing of Q = 48 online orders requires either 4 hours of robot time (L = 0 and K = 4)
or 8 hours of human time (L = 8 and K = 0). Hours
of robot time and hours of human time are perfect substitutes; for example, the processing of Q = 48 online
orders could also be done using K = 3
Determine the labor and capital demand in terms
of Q0, w and r

Economists usually think of persistent shortages being caused by some interference with the market mechanism. Ask the class if they can think of free markets that experience shortages. There are numerous examples, but one that most will understand is tickets to a hot concert. These tickets are often priced below equilibrium. One reason is to create “buzz” about the event. Some bands claim they keep ticket prices low to be fair to their fans. Ask the class who gains and who loses when the price is set below equilibrium. This can lead to a discussion of the value different people place on their time. Question: Name two other industries or markets where shortages appear to be created for publicity and marketing purposes.

2. A business idea requires to spend $20,000 on training the staff this year and will save $1,000 a every year afterwards (because the staff is more productive).
a. Will the firm implement the idea if the interest rate is 4%? Explain. (1)
b. Will the firm implement the idea if the interest rate is 8%? Explain. (1)
c. At what interest rate is the firm indifferent between implementing the idea and abandoning it? Explain. (2)