Economics Answers

1. The demand for ice cream cones is P=1600 and Qd is 2
The supply of ice cream cones is P =400 and Qs is 1. The price of a cone is expressed in cents, and the quantities are expressed in cones per day. To find the equilibrium price (P*) and the equilibrium quantity (Q*), substitute Q* for QD and QS and P* for P. (8 marks). (FOR QD, P=a-bQd and for QS, P=c+dQS).

1. The demand and Supply Schedules for potato chips are:
Price(THIS IS INDIVIDUAL WORK.).
rand per bag) Quantity demanded(millions of bags a week) Quantity Supplied(millions of bags a week)
5 165 130
6 160 140
7 150 150
8 130 160
9 120 170
10 110 180


a. Draw a graph of the potato chip market and mark in the equilibrium price and quantity. (10 marks)
b. if the price is R6 a bag, is there a shortage or a surplus and how does the price adjust? (5 marks)

A bridge will cost (in the present) $280 million to build, will be completed by next year, and will start producing the benefits next year, $8 million per year. It will cost $1 million a year to maintain (starting next year, too). It is expected that the bridge will last for a long time. The market interest rate is 5%. Approximate (with the formula for perpetuity) the present value of the bridge project (including the cost of construction, benefits, and the cost of maintenance).

b. If the marginal cost of planting and harvesting an acre is $27,000 per acre for each of the five acres, how many acres should the farmer plant and harvest?

Which of the following is true of the profit-maximising level of employment in a perfectly competitive labour market?

(1) the marginal revenue product equals the value of marginal product
(2) the marginal revenue product equals the marginal cost of labour
(3) the marginal product equals the marginal revenue product
(4) the marginal product equals the marginal cost of labour

At what price should a firm produce to maximize profit in a perfectly competitive market

(1) where price equals marginal cost
(2) where price equals marginal revenue
(3) where price equals total revenue
(4) where price equals average revenue

(B) which of the following correctly characterises a perfectly competitive labour market?

(1) a large number of firms and a large number of workers
(2) imperfect information
(3) employees and employers having individual control over the market wage rate
(4) very few skilled workers

DP Gumby produces sleeveless sweaters. He can separate the demand function into
a domestic component:
QD = 32 – 0.4PD
and a foreign component
QF = 18 – 0.1PF
His total cost function is: C = 50 + 40Q
(a) On three separate diagrams sketch the demand curve in the domestic
market, the demand curve in the foreign market and the total demand curve.

Are confrence fees included in the producer price index

1. The demand for ice cream cones is P=1600 and Qd is 2 The supply of ice cream cones is P =400 and Qs is 1. The price of a cone is expressed in cents, and the quantities are expressed in cones per day. To find the equilibrium price (P*) and the equilibrium quantity (Q*), substitute Q* for QD and QS and P* for P. (8 marks). (FOR QD, P=a-bQd and for QS, P=c+dQS). 2. The demand and Supply Schedules for potato chips are:
Price(rand per bag) Quantity demanded(millions of bags a week)
Quantity Supplied(millions of bags a week)
5 160 130 6 150 140 7 140 150 8 130 160 9 120 170 10 110 180
a. Draw a graph of the potato chip market and mark in the equilibrium price and quantity. (10 marks)
b. if the price is R6 a bag, is there a shortage or a surplus and how does the price adjust? (5 marks)

John Scott has R200 per week available to spend on beer and cigarettes. Beer costs R10 per bottle and cigarettes cost R40 per packet. Suppose John buys 8 bottles of beer and 3 packets of cigarettes and that his marginal utility from beer is then 20 utils and that from cigarettes 35 utils. Is he in equilibrium? If not, should he buy more beer or more cigarettes? Explain.