Economics Answers

Total revenue of a particular production firm which engages in production for short run is Rs. 200 million, total cost is Rs.240 million and total fixed cost is Rs. 40 million. In this situitation should this firm continue its production or not. Explain.

"Demand is the actual quantity that should be purchased"explain whether the above statement is true or false.

Gail works in a flower shop, where she produces 10 floral arrangements per hour. She is paid $10 per hour for the first eight hours she works and $15 an hour for each additional hour she works. What is the firm’s cost function? What are its AC, AVC, and MC functions? Draw the AC, AVC, and MC curves.

Total cost for producing the first unit is Rs. 240 while marginal cost is Rs. 90. What is the average fixed cost?

PED and PES with respect to a certain product is – 0.2 and 1.4 if the government impose a unit tax of Rs. 80 what would be the increase amount of price?

Given that income is $500 and P X = $20 and P Y = $5, what is the market rate of

substitution between goods X and Y? Show solutions.

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.

Suppose an individual's marginal rate of substitution is three slices of

pizza for one beer at the present bundle of beer and pizza she is consuming. If

the price of beer is $1.00 and the price of a slice of pizza is $1.50, is the

consumer maximizing her welfare? If not, how should she change her

consumption?

a. How does an increase in the tax rate affect the IS curve?

b. How does the increase affect the equilibrium level of income?

A 1996 bill reforming the federal government’s anti-

poverty programs limited many welfare recipients to

only two years of benefits.

a. How does this change affect the incentives for

working?

b. How might this change represent a trade-off

between equality and efficiency?