Economics Answers

State one characteristics in common between change in demand and change in quantity demanded

Q1) Consider the fowling economy, with two consumers and two commodities. Consumer 1 has the endowment vector, w1 = (1,1), and the utility function,
u1(x1) = log(x11) + A log(x21)
where A is a positive constant. Consumer 2 has the endowment vector, w = (1,1), and the utility function,
u2(x2) = log(x12) + log(x22)
a) Define competitive equilibrium for this economy.
b) Calculate the competitive equilibrium price vector, as a function of the parameter A.

Why are AVC and ATC curves U- shaped in the short run?

Suppose a consumer consuming two commodities X and Y has the following utility function X0.4 Y0.6. If price of good X and Y are 2 and 3 respectively and income constraints birr 50.
A/ Find the quantities of X and Y which Maximize utility
B/ Find the MRSxy
C/ What are the maximum utility drived from consuming of the two commodities?

Suppose a consumer has income of 200 birr per month and he wants to spend all of his income on two goods, X and Y, whose prices are birr 5 respectively. Based on this information answer the following questions;
A. Express the budget line of the consumer both algebraically and diagrammatically.
B. Compute the equation of the budget line and interpret the result
C. Determine the slope of the budget line and interpret the result
D. What will happen to the original budget line?
I/ if money income doubles
II/If the price levels increases by 50%
III/ If Price of good Y doubles

1. Suppose that the total utility function of a consumer is given by TU(x,y) = 6XY, and the prices of X and Y are 1 birr and 2 birr per unit, respectively. If the income of the consumer is birr 600 birr and if he/she spends all of his/her income on the consumption of commodities of X and Y, find the optimum amount of X and Y that the consumer will consume at equilibrium.

What is your opportunity cost of attending a baseball game Saturday afternoon?

1. Find the monthly yield data for 10 year Treasury, AAA, and BAA corporate bonds from January of 2007 and December of 2008 (3 points).

1) Plot them and explain the relation between interest rates and default risk.


2) Explain the impacts of default risk on interest rates when there was a financial crisis using the data.

price of good x=12,price of good y=4,income of consumer 240
a)find the utility max of combination o x and y