Economics Answers

Consider the following events: Scientists reveal that

eating oranges decreases the risk of diabetes, and at

the same time, farmers use a new fertilizer that makes

orange trees produce more oranges. Illustrate and

explain what effect these changes have on the

equilibrium price and quantity of oranges.

The market for pizza has the following demand and

supply schedules:

Price Quantity Demanded Quantity Supplied

$4 135 pizzas 26 pizzas

5 104 53

6 81 81

7 68 98

8 53 110

9 39 121

a. Graph the demand and supply curves. What are

the equilibrium price and quantity in this market?

b. If the actual price in this market were above the

equilibrium price, what would drive the market

toward the equilibrium?

c. If the actual price in this market were below the

equilibrium price, what would drive the market

toward the equilibrium?

playing rock ‘n’ roll music at high volume. Placido loves opera and hates rock ‘n’ roll. Unfortunately, they are next-door neighbors in an apartment building with paper-thin walls. a. What is the externality here? b. What command-and-control policy might the landlord impose? Could such a policy lead to an inefficient outcome? c. Suppose the landlord lets the tenants do whatever they want. According to the Coase theorem, How might Bruno and Placido reach an efficient outcome on their own? What might prevent them from reaching an efficient outcome?

The total cost function of a firm is given by c = 100 + 40 q + 5q2.

A. Find Total fixed cost

B. Find the Marginal cost equation and the marginal cost of the 5th unit

C. Find Average variable cost equation and the AVC of the 4th unit

D. Find average fixed cost equation and the AVC of the 6th unit

E. Find average total cost equation and the ATC

Over the past 40 years, technological advances

have reduced the cost of computer chips. How do

you think this has affected the market for computers?

For computer software? For typewriters?

Consider the markets for film streaming services,

TV screens, and tickets at movie theaters.

a. For each pair, identify whether they are

complements or substitutes:

r
Film streaming and TV screens

r
Film streaming and movie tickets

r
TV screens and movie tickets

b. Suppose a technological advance reduces the cost

of manufacturing TV screens. Draw a diagram to

show what happens in the market for TV screens.

c. Draw two more diagrams to show how the

change in the market for TV screens affects the

markets for film streaming and movie tickets.

Twins Anna and Aayan are excited to be starting college next

year. Anna is leaving home behind and heading to college in Bangalore

while her brother Aayan is going to live at home and attend the local

university. Up till now they have always used cash or gift cards received for

holidays or birthdays to pay their expenses. Any savings they had was in

the piggy bank in their rooms. Now that college is almost there, they realize

that cash may not be the best option.

Required:

1. Why is cash not always a good option?

2. What should Anna consider when picking a bank? What about

Aayan? Do they have different needs?

The elasticity of supply of a wheat is 0.3 and the elasticity of supply of magazine is 1.3 if the price of wheat and magazines both rice 10% what is the increase in the quantity of wheat supplied and the increase in the quantity of magazine supply

7. A worker's total earnings for one day is $100. He received a $20 fixed payment and

consumes 14 hours of leisure. What is the hourly wage rate? Show solutions

1.1 Money is regarded as a factor of production. Do you agree with this statement? Support your answer. [02] 1.2 Use the production possibility frontier (PPF) to illustrate and explain the scarcity, choice and opportunity cost of a farmer who is producing maize and sorghum. Use your own values. [09] 1.3 Draw and explain the diagram showing the three major flows in the economy. [06] 1.4 Show the effects of the following on the demand curve: a) An increase in the number of awareness against consumption of coffee due to its health risk. [02] b) A increase in the price of tea (coffee is the substitute product) [02] c) An increase in the income of consumers for an inferior good. [02] d) A decrease in the price of cornflakes (Milk is a complementary product) [02