Economics Answers

four firm supplying homogeneous product have identical cost function given by C(Q)=40Q. if demand curve for the industry is given by m=100-Q. find the equilibrium output if they are cournot competitors what would be the resultant market price? what are the profit of the each firm ?

Suppose the consumption function of a society is:C=600+0.85Y where C=Total Consumption;Y=Personal disposable income.Identify the following:1)Autonomous consumption.2)Marginal propensity to consume;3)When Y=1000,what will be the induced consumption?4)If income is increased to 3000,what will happen to the total consumption?5)What is the autonomous consumption when income is 1000?

c. Given that money supply is KSh 1400 millions, autonomous consumption is KSh120 million, while the responsiveness of consumption to changes in disposable income is estimated to be 80% by the ministry of planning. Aggregate autonomous investment is ksh 200 million investment while one % increase in interest rate changes investment by KSh10 millions. The government collected KSh 200 million as tax revenue and wishes to increase expenditure by 10% above the revenue collected. The transactionary and precautionary demand for money function is expressed as mt/p=0.1y while the speculative money demand ms/p is -100r . compute the equilibrium national income, consumption and investments.

Question 1
Mr. Hassan’s demand function for rice is given by
X = 15 + M (10P) -1
Where X = amount of rice demanded, M = income of the consumer, P = price of rice.
Originally, the income of Mr. Hassan is $ 4,800 per month and the price of rice is $120/kg. If the price falls to $ 100/kg, calculate to total effect (TE), substitution effect (SE) and Income effect (IE) emanating from this change in price.
Question 2
(a) Given the following monotonically transformed utility function faced by the consumer
U(X1X2) = X_1^0.5 X_2^0.5
The price of good X1 is P1 and the price of good X2 is P2. Derive the optimal demand (Marshallian demand) function for X1 and for X2.
Question 3
Under a perfect competition the price as sh. 6 per unit has been determined. An individual firm has a total cost function given by C=10+15Q - 5Q^2+Q^3/3. Find:
i) Revenue function
ii)The quantity produced at which profit will be maximum profit
iii)Maximum profit

Take a sample of thirty households from two counties A and B and collect data on their incomes for the past month. The information obtained (in thousands of dollars) and their corresponding frequencies is given below:
A's Income Frequency B's Income Frequency
35 4 23 2
49 7 15 4
21 3 12 6
39 5 11 7
15 6 32 5
28 3 18 2
25 2 22 4
i)Calculate the median income of A
ii) Calculate the mode income of B
iii) Based on arithmetic mean income which county has lower average monthly incomes?
iv) Calculate standard deviation of the income distribution of each county.
v) Based on the coefficient of variation which of the counties has least variability in income distribution?

Assume that a certain process has an 80% learning curve effect and the first unit took
2000hrs to produce.
Required:
a) Compute the number of hours required to produce the first 32 units
b) Compute the number of hours required to produce 32nd unit.
c) Assume that the wage rate is Kshs.100 per hour, compute the Labor cost of
producing the last 16 units

Assume that a company intends to sale product in the market, at a selling price of sh.9 per
unit. The V C is shs.5 per unit and the T F C is sh.2000
Required:
i. Compute the B E P in units and in shs.
ii. Assume that the company intends to make a profit before tax of 20% of sales,
determine the number of units that must be sold.
iii. Assume that the corporate tax rate is 30% and the company has a target profit
of 1640 after tax. Compute the number of units that must be sold to earn this
target profit.
If the company expects to sale 600 units, compute the marginal of safety.

Governments often use a sales tax to raise tax revenue, which is the tax per unit times the quantity sold.will a specific tax raise more tax revenue if the demand curve is inelastic or elastic at the original price?explain.

What is cross-functional integration for education services?

) An open macroeconomic model for a hypothetical economy is represented as follows:
Y= C0 +Io+Go+X0-M, M=mo+m1yd,C=co+c1yd, T=tY and Yd=Y-T
a. Show that equal change in tax and government expenditure are expansionary to the economy
b. Derive the equilibrium level of savings in the economy above
c. Derive the investment multiplier