Economics Answers

4. Given are the following equations for lentils:

Q_{s} = 2P

and Qd = 300 - P

a. Government imposes a price ceiling of Rs.50 on lentils. Calculate the consumer and producer surplus at the ceiled price?

b. Calculate the dead weight loss.

ABC Company, a manufacturing firm, has supplied the following information from its accounting

Records for the year 2020

Purchases of raw materials Br.76,000

Direct labor cost 52,500

Supplies used 5,300

Factory insurance 1,050

Commissions paid 7,500

Factory supervision 9,675

Advertising 2,400

Material handling 11,000

Work-in-process inventory, January 1, 2020 47,500

Work-in-process inventory, December 31, 2020 42,000

Materials inventory, January 1, 2020 10,400

Materials inventory, December 31, 2020 28,500

Finished goods inventory, January 1, 2020 20,055

Finished goods inventory, December 31, 2020 10,750

Sales as of December 31, 2020 250,000

Sales as of December 31, 2020

Required

1. Prepare a statement of cost of goods manufactured. (10 points)

2. Prepare a statement of cost of goods sold. (5 points)

3. Prepare income statement (5-points)

suppose you are a monoipoliste and findthe demand elasticity of your product is different in two market what would be your pricing strategy answer?

Depreciation is caused due to

Given are the following equations for lentils:

Qs = 2P and Qd=300-P

a. Government imposes a price ceiling of Rs.50 on lentils. Calculate the consumer and producer 

surplus at the ceiled price?

b. Calculate the dead weight loss. 

a. What kind of market structure has evolved in the market of mobile handsets? Discuss the 

characteristics of the market structure. 

. A firm with a given fixed level of capital, decides to increase its output by adding labor. 

However, if it experiences a fall in its output instead, what could be the reason for the same?

Consider a lottery with two equally likely outcomes, $ 25 and $ 144, with associated utility

function of individuals A, ua (m) = √100m and individual B, ub (m)= 5 meter square

a) Determine expected utility and utility of expected value of the lottery for each

individual?

b) Define and compare certainty equivalent of individual A and B?

c) Compare risk premium of individuals A and B? Why risk premium of individual A is

higher?

d) Compare and interpret the absolute risk aversion, ra (m) of the two persons?

Consider a farmer in a rural village and a business man in an urban area that adopt various

risk reduction strategies in Ethiopia. Assume also that most farmers in Ethiopia do not

insure for crop and livestock failure and businessmen also hardly insured against property

loss.

A) Suggest at least two strategies adopted to reduce risk by each agent?

B) Explain concisely how each strategy can reduce risk by agents?

Geoffrey has an income of $3000. Wine costs $3 per glass, and cheese costs $6 per pound. Draw the consumer’s budget constraint. What is the slope of this budget constraint? What is the MRS of the two goods? How is the MRS related to the slope of consumer’s budget constraint?