Economics Answers

Suppose the demand curve is described by the equation Q = 400 - 10P, where Q is the quantity
demanded and P is the price of the good. At price P = 30, the quantity demanded is
a. 400
b. 300
c. 200
d. 100

Demand is given by P = 24 – 4Q, where P is the price of the good and Q is the quantity
demanded. At P = 12, the own price (point) elasticity is
a. 0.25
b. 0.5
c. 1
d. 2

When output is Q = 10, the marginal cost MC is
a. the slope of a line drawn tangent to the total cost curve where output Q = 10
b. the total cost of 10 units of output divided by 10
c. the slope of a ray drawn from the origin to the point on the total cost curve where output
Q = 10
d. the average cost of 10 units of output

A firm is producing 100 units of its product. At this level of output the firm’s average variable
cost AVC = $80, and the average total cost ATC = $120. The firm is a price taker and the price
for its product is $100. Assuming that the firm is maximizing profits and that labour is the only
variable input, answer the following questions: a. What are the fixed costs of the firm? Give a number.
b. What are the profits or losses?
c. What are the rents, if any?
d. Is the firm producing at the minimum ATC? Explain.
e. Does the firm experience diminishing marginal products of labor at this level of output? explain

A city government is trying to decide whether it should have a celebration for its one-hundredth
anniversary. The financial success of the project will be strongly dependent on the weather. The
alternatives available to the city government are
(1) have large celebration
(2) have a small celebration
(3) have no celebration.
The payoff matrix of this decision is as under:
PAYOFF MATRIX FOR CITY CELEBRATION PROBLEM
0.5 0.2 0.3
S1 S2 S3
Sun Cloudy Rain
D1 Large celebration 350,000 80,000 -150,000
D2 small celebration 150,000 100,000 -50,000
D3 No celebration 0 0 0

A. Aggregate spending will increase if...

1. Real wealth falls
2. Interest rate falls
3. Consumption falls
4. Investment falls

B. Inflation is likely to....

1. Reduce the cost of living
2. Raise the standard of living
3. Reduce the purchasing power of a currency
4. Increase the purchasing power of a currency

A. Which of the following is incorrect about imports in the Keynesian model?

1. They not always taken as independent of the level of income
2. Increase when the level of income increases
3. Decrease when the level of income decreases
4. They may be greater than exports

B. C=100+0,80Y, what is the savings function in the simple Keynesian model?

1. S=-100+0,20Y
2. S=100+0,20Y
3. 0,20
4. 5

b. At prices of P1 = $5 and P2 = $6 quantities demanded are Q1 = 30 - 2*5 = 20, Q2 = 30 - 2*6 = 18, so the arc elasticity is:

Ed = (18 - 20)/(6 - 5)*(6 + 5)/(18 + 20) = -2/1*11/38 = -0.579. please give me formula because arc elasticity formula is different

for each pair of commondities state which you think is the more price elastic and give you reasons perfume and salt penicillin and ice cream automobiles and automobile tires ice cream and chocolate ice cream

Explain why each of the following statements is True, False, or Uncertain according to economic
principles. Use diagrams where appropriate. Unsupported answers will receive no marks.
the explanation is important.
A5-1. The transaction of a consumer who buys a “meal-kit” sent to their home adds less to GDP than a similar
consumer who goes out to a restaurant for the same meal.