Economics Answers

A discriminatory farmer monopolist sells the product to college students and lecturers.

The demand function for students is Qsd=200-25p and the demand function for

lecturers is Qld=400-25p.Marginal cost is $1 per product. Calculate the amount of

product the monopolist sells for students and Lecturers. At what price level? [5

marks]

b. Suppose a firm is operating in a monopolistically competitive market structure.

i.Mention at least three characteristics of this market structure. [3 marks]

ii.What type of demand curve would the firm experience? Why? [2 marks]

iii.Draw the cost and revenue curves for a typical monopolistically competitive firm

in the short run for a given price level and explain how the firm chooses the level of

output that maximizes profit. [5 marks]

A firm is described as combining managerial coordination with market exchange in order to produce its good or service. Does similar behavior occur in government bureaus? Explain.

Explain consumer’s equilibrium condition with help of indifference curve approach. How will 

a change in consumer’s income affect his equilibrium?

Consider the case in which the items are delivered at a constant rate e and the demand arrives at a constant rate d. For given d and changing c, when the ratio of Q/I reaches the maximum, and when does it reach the minimum? If you have the option to control c, do you want this ratio to reach the maximum or the minimum? Explain why?

By using the knowledge of relationships among the various costs of production concepts fill the blank space of the following table

Quantity   TC   TFC TVC ATC AVC MC

0        125    –        –      –        –       –

10          –       –        –       –         –        5    

20          –       –        –      105       –       –

30          –       –      110      –         –      –

40          255     –        –       –        –       –

50            –       –        –       –        3       –

60           –       –        –       –       –       3

1.   By using the knowledge of relationships among the various costs of production concepts fill the blank space of the following table

Quantity TC TFC TVC ATC AVC MC

0 125

  10 5

20 105

30 110

40 255

50 3

60 3

If a consumer daily income rises from Rs. 300 to Rs. 350, his purchase of a good X increases 

from 25 units to 35 units, find income elasticity of demand for X.

 Explain consumer’s equilibrium condition with help of indifference curve approach. How will 

a change in consumer’s income affect his equilibrium?

1. A tour operating firm plans to take tourists between Addis Ababa and Jimma. its estimated cost function given by C =100 +50 N+4N2 (Where N denotes the number of passengers per day)

A. State the average cost function.

B. State the marginal cost of the average cost function.

C. Find the number of passengers per day that minimize average cost.

D. What is the minimum average cost at the optimal level of passenger?

E. What will be the total cost at the optimal level?