Economics Answers

In the circular flow of income and spending, i.e. the basic flow of income and spending between households and firms supplemented by the foreign, financial and government sectors,

a) Yesterday, the price of a packet of sachet water was ȼ3.00, and Sompa was willing to buy 10 packets. Today, the price has gone up to ȼ3.75 a packet, and Sompa is now willing to buy 8 packets. Is Sompa's demand for sachet water elastic or inelastic? What is her point elasticity of demand at the original price? What is the mid-point elasticity of demand?

A manufacturing company needs 2500 units of a particular component every year. The company buys it at the rate of Sh. 30 per unit. The order processing cost for this part is estimated at Sh. 15 and the cost of carrying a part in stock comes to about Sh.4 per year. The company can manufacture this part internally. In that case, it saves 20% of the price of the product. However, it estimates a set-up cost of Sh. 250 per production run. The annual production rate would be 4800 units. However, the inventory holding costs remain unchanged.
i. Determine the EOQ and the optimal number of orders placed in a year. (3 marks)
ii. Determine the optimum production lot size and the average duration of the production run. (4 marks)
iii. Should the company manufacture the component internally or continue to purchase it from the supplier?

Give an outline of the differentiating characteristics of a monopoly and a oligopoly market structure

Given a hypothetical consumption function of the form:
Y = C + I0 + G0
C = α + β
Where: = Y – T
Y = Income
T = Taxes
Compute the equilibrium level of income and consumption (4 marks)

The demand curve will not shift if...

consumers prefer less of the product.
a substitute product is available for a lower cost.
the price of the product decreases by 20 percent.
the number of buyers decreases.

discuss the profit maximizing position of a perfectly competitive firm in both the short run and long run

with the aid of diagrams explain the relationship between price elasticity of demand and total revenue

The California State University System has raised its fees by 10%. Would the demand for these universities (such as San Diego State University or CSU – San Marcos) be relative elastic or inelastic? Use the three factors to explain why.

The state of West Dakota currently has per capita income of $35,500, average annual temperature of 43.0 degrees, median age of 37.5 years, and 48.0% (or 0.48) of the population in a metro area. The state suddenly experiences an improvement in its economy, and increases its per capita income to $38,600. This improvement will likely be associated with the burglary rate changing from about 519 annual burgles to about ___ annual burgles (round your answer to the nearest whole number, no decimals).