Economics Answers

The market for good A is in equilibrium. Then the price of a substitute good decreases and, simultaneously, the price of an input used to make good A increases. The equilibrium price of good A will

a.

either increase, decrease, or stay the same, and the equilibrium quantity of good A will increase.

b.

either increase, decrease, or stay the same, and the equilibrium quantity of good A will decrease.

c.

increase and the equilibrium quantity of good A will either increase, decrease, or stay the same.

d.

decrease and the equilibrium quantity of good A will either increase, decrease, or stay the same.

Jenga is a popular game where the players have to remove and replace blocks to build a higher (and more unstable) tower. Jenga blocks are made of wood. If there is an increase in the price of a substitute for jenga and, simultaneously, an increase in the price of wood, the equilibrium price of jenga will:

1.either increase, decrease, or stay the same, and the equilibrium quantity could either decrease or increase.

2.either increase, decrease, or stay the same, and the equilibrium quantity will decrease.

3.increase and the equilibrium quantity will increase.

4.increase and the equilibrium quantity will either increase, decrease, or stay the same.

What would you expect to happen to the price of chicken samosas if the price of flour decreased and the price of chicken meat decreased?

1.The equilibrium price will decrease and the equilibrium quantity will be indeterminate.

2.The equilibrium price will decrease and the equilibrium quantity will increase.

3.The equilibrium price will be indeterminate and the equilibrium quantity will increase.

4.The equilibrium price will be indeterminate and the equilibrium quantity will increase.

Since one of the actors in a popular television series has been spotted wearing pink sun glasses, pink sun glasses is a must for every fashion conscious person. At the same time, a technological innovation reduces the costs of producing pink sun glasses. As a result, the equilibrium price of pink sun glasses will:

1.decrease and equilibrium quantity will either increase, decrease, or stay the same.

2.either increase, decrease, or stay the same, and equilibrium quantity could also either increase, decrease, or stay the same.

3.increase and equilibrium quantity will either increase, decrease, or stay the same.

4.either increase, decrease, or stay the same, and equilibrium quantity will increase.

Suppose we observe that the equilibrium quantity of a particular good has increased significantly over the past 5 years, with virtually no change in the equilibrium price. The most likely explanation is that, over the past 5 years:

1.supply has decreased but demand has increased.

2.both supply and demand have increased.

3.both supply and demand have decreased.

4.supply has increased but demand has decreased.

Use micro (and relevant macro) economic analysis to justify your decision of relocating your business from one country to a particular country.

Write this production function as a relation between output per worker and capital per worker.

Is this production function characterised by constant returns to scale? Demonstrate

Compute output when K = 49 and N = 81

Consider an economy that consists only of those who bake bread and those who produce its ingredients. Suppose that this economy’s production is as follows: 1 million loaves of bread (sold at Rs. 2.00 each); 1.2 million pounds of flour (sold at Rs. 1.00 per pound) and 100,000 pounds each of yeast, sugar & salt (all sold at Rs. 1.00 per pound). The flour yeast, sugar & salt are sold only to bakers, who use them exclusively for the purpose of making bread.

 a. b.

Calculate the total income of the economy.

How much value is added to the flour, yeast, sugar & salt when the bakers turn into bread?