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Calculate the income elasticity of commodity A if income of the consumer changes from $1500 to $3400 and the quantity also changes from 150 to 405
Why does the quantity of salt demand tend to be unresponsive to changes in its price?
Define the term corn economy
The demand and supply equations for a product are: Qd = 300 – 6P and Qs = -40 + 6P. • Determine the market equilibrium and draw graphs. • Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graphs and explain. • Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus and dead weight loss.
Given the two-factor product in, Q = 150L0.5K
0.5, wage rate of labour equals to 50 and rental
cost of capital equals to 40.
Determine the amounts of labour and capital that will minimize the cost of producing 1118
units of output.
Using Indifference curve analysis, show how price effect of a commodity is decomposed into
income effect and substitution effect.
How does a competitive firm determine its profit-maximizing level of output? Explain
The Output and the total cost data for a firm are given below. Work out the following costs.
Total Fixed cost, Total Variable cost, Average Fixed cost, Average Variable cost, Average Total cost
and Marginal cost at various levels output.
Units of output 0 1 2 3 4 5 6
Total cost (Rs.) 60 90 100 105 115 135 180
How does a competitive firm determine its profit-maximizing level of output? Explain
Suppose that when Keith’s income increases from RM28,000 to RM30,000 per year, his
purchases of good A increase from 4 units to 5 units.
i. Calculate the coefficient of income elasticity of demand.
ii. Interpret the value of the coefficient above.
