Economics Answers

Distinguish between descriptive economics and analytical economics?

Critically discuss elastic,inelastic and unnitary condition/ forms of price elasticity of demand through the use of pratical examples and graphs

b) The demand for a commodity is given by p = 400 – q. The average total cost of producing the commodity is given by 1000/q+100-5q+q2
where p is the price in shillings and q is the quantity in kilograms.

Required
i) What does in the ATC equation represent economically?
ii) Determine the output that leads to maximum profit and the profit at the level of output.

The price elasticity of supply is likely to be greater for motor vehicles in general than for a specialized market, such as sport utility vehicles.
1) True
2) False

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q

At the above short-run equilibrium level, the firm is …
1. making a profit of R1 000 000
2. making a loss of R1 000 000
3. making zero economic profit

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
The short-run equilibrium level of output is …
1. 1
2. 1 000
3. 10 000
4. 10 0000

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
The equilibrium price of books is …
1. R100
2. R1
3. R50
4. R5

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
1. The equilibrium quantity of books is …
1. 500 000 books
2. 1 000 books
3. 1 book
4. 10 000 books

With regards to deriving the IS curve mathematically. ( in a closed economy with a govt)

The answer is Y= Ac - er + c( Y -T ) + Ai -dr + G

I am trying to fully understand this can you assist, am i correct in saying:-

The Consumption part is Ac - er +c
The Investment part is Ai - dr

Ac and Ai i assume are aggregate consumption and Aggregate investment
But what is er ? and what is dr ? ( r being the interest rate) , but what exactly is e and d ?

I am taking a guess , but is dr the interest accrued on inventories ? Not sure on er

Thanks for assistance

a. The utility function for a consumer utility is U=30Q1 1/2 Q2 1/2 .If the price per unit of Q1 is Ksh 10 and Ksh 5per unit of Q2, determine quantities Q1 and Q2 that the consumer should have to maximize utility if the consumer Ksh 350budgeted