Economics Answers

Given Ca=20 c=MPC=3/4 Ip=I=20 a; determine equilibrium level of income when there is no government sector b;define equilibrium level of income When government spending is equal to 25 &no taxation c; define equilibrium level of income When government expenditure and tax is equal to 25

Suppose Natasha currently makes ​$57,000 per year working as a manager at a cable TV company. She then develops two possible entrepreneurial business opportunities. In​ one, she will quit her job to start an organic soap company. In the​ other, she will try to develop an​ Internet-based competitor to the local cable company. For the​ soap-making opportunity, she anticipates annual revenue of ​$483,000 and costs for the necessary​ land, labor, and capital of ​$434,000 per year. For the Internet​ opportunity, she anticipates costs for​ land, labor, and capital of ​$3,204,000 per year as compared to revenues of ​$3,273,000 per year.

a. What would she make in profits if she opens her organic soap​ company? ​$

enter your response here

b. What would she make in profits if she opens her Internet​ business? ​$

enter your response here

Suppose people’s income drops to $10,000. How much would this firm have to increase its advertising in order to counteract the drop in income? (

Part III: Answer the following questions as per the instructions given.

1.Given:

 P= Br. 10      and       TC = 120 + 4Q²

A. Find the profit maximizing level of price and quantity.

B. What will be the total profit?

2.Briefly explain the types of returns to scale.

3.Define market and State some of its elements.

Part II: Choose the best answer for the following statements

1. As per Ordinalists, it is assumed that

A. Utility is not measurable   B. Constant marginal utility of money

D. All                                           C. Diminishing marginal   

E. A and C 

2. Which one of the following is False?

A. The demand will be more elastic if there are close substitutes for it.

B. Necessities are more price elastic than luxuries

C. Demand is more elastic in the long run.

D. None

3. At zero unit of out put

A. Total cost is equal to fixed cost

B. Total variable cost is greeter than fixed cost.

C. Fixed cost is equal to zero

D. Variable cost is equal to total cost

4. In imperfect competition

A. Demand curve is elastic

B. Average revenue is negatively sloped

C. There are many sellers

D. Demand curve is up ward sloping

5.Total utility minus total amount of money spent.

A. Consumer deficit          B. Consumer surplus

C. Producer surplus          D. Producer deficit

Part 1: Write true or false for the following statements on the separate answer sheet provided.

1. In cardinal utility theory it is assumed that money has constant marginal utility.

2. Indifference curves slopes down ward from right to left.

3. If the quantity demanded does not show any Change as price changes, then

elasticity is zero.

4. The equality of MC and MR determines the equilibrium position of the firm

under all market situations.

5. In a perfectly competitive market structure the marginal cost curve is also its

supply curve.

Suppose that business travelers and vacationers have the following demand for airline tickets from City X to City Y:

As the price of tickets rises from $200 to $250, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the arc elasticity method in your calculations.)

Given Ca=20 c=MPC=3/4 Ia=I=20 detemine equilibrium level of income when there is no government sector b; define equilibrium level of income when government spending is 25 &no taxation