Economics Answers

The Pear company sells a smart phone for $250. Its sales have averaged 8,000 units per month over the last year. Recently, its closest competitor Banana company reduced the price of its smart phone from $350 to $300. As a result, Pear’s sales declined by 1,500 units per month. (a) What is the cross price elasticity of demand between the Pear and Banana smart phone? Use the averaging formula. What does this indicate about the relationship between the two products? (b) If the Pear company knows that the price elasticity of demand for its phone is -1.5, what price would the Pear company have to charge to sell the same number of units as it did before the Banana company price cut? Assume that Banana company holds its price of its phone constant at $300. Use the averaging formula.

Using a production possibilities frontier (PPF) diagram, determine how does the PPF change in response to the following events: Make sure to explicitly indicate what sectors you are representing, and what sort of assumptions each event implies (i.e., a neutral effect vs a sector-biased effect). The latter follows from your assumptions on the factor intensity of the sector you are representing. a) Increasing skilled migration into the country b) Imposing taxes on manufacturing (hint: define a two-sector producing economy, manufacturing and services). c) Decreasing the expenditure on research and development d) Implementation of easier rules for foreign investment e) The effects of a pandemic

Identify what sort of effects the following listed events have. You are required to define the market under study (for example: the labour market, oil market, etc). Explain whether the event acts on the demand or supply side, and whether the event leads to a quantity or price change, or leads to a shift in demand and/or supply. Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply. a) An increase in oil prices as a consequence of a price dispute in the world oil markets b) The implementation of a minimum wage c) The implementation of subsidies to milk producers in Australia d) The implementation of a Carbon tax in the economy. A Carbon tax is charged according to the level of emissions of greenhouse gases in an economy. e) The implementation of an increase in tuition in University studies

Suppose a firm has its TR and TC functions given as follows:

        TR =300 Q -3Q² and TC =500 +50 Q +2Q²

         A. State the profit function of the firm

         B. State the marginal profit function.

         B .Find the level of Q that maximizes total profit.

         D .State the marginal revenue function  

         E .State the marginal cost function.

Suppose you are a monopolist and find that the demand elasticity of your product is different in two markets. What would be your pricing strategy?

if a duopolist has a linear demand curve of the form Q=400-P.Assuming each firm has total cost (TC=3000+100Q).Calculate the profit maximizing price quantity combinations using the following oligopoly pricing models listed below demonstrating that

a)Under the cournot model,both firms will earn the same level of profit and determine industry profit and explain why this should be the case.

b)Under the cartel model each firm earns a higher profit that under cournot

c)Under the quasi competitive model,the firm will make a loss equivalent to fixed cost

d)Under the stackelberg's model, the leader will earn morethan twice the profit of the follower and that the total industry profits will be lower than under both cournot and cartel models. Explain why this would be the case

Given below are the demand and the supply functions for three interdependent commodities.

Qd1=110 - 4P1+ 3P2 -4P3;Qs1= 2P1 -20

Qd2= 46+ 2P1 -4P2+4P3; Qs2= -14+ 2P2

Qd3= 20 -P1 + 4P2 - 2P3 ;Qs3=2P3 -10

Determine the equilibrium prices and quantities for the three commodity market model. Then compute the prices and cross elasticities of demand for all the three markets and interprete their coefficients

if a duopolist has a linear demand curve of the form Q=400-P.Assuming each firm has total cost (TC=3000+100Q).Calculate the profit maximizing price quantity combinations using the following oligopoly pricing models listed below demonstrating that

a)Under the cournot model,both firms will earn the same level of profit and determine industry profit and explain why this should be the case.

b)Under the cartel model each firm earns a higher profit that under cournot

c)Under the quasi competitive model,the firm will make a loss equivalent to fixed cost

Given below are the demand and supply functions for three interdependant.

Qd=110-4p+3p-4p: Qs=2p-20

Determine the equilibrium price and quantity for the commodity market model.Then compute the price and cross elasticities of demand for the market and interpreted it's coefficient

Find the APL, APK, MPL and MPK for the following production functions i) Q = AK LB ii) Q = 16K4/24% iii) In question (i) above express MPL in terms of B, Q, and L and MPK in terms of a, Q, and K

a) Demonstrate the Euler's theorem for the following production functions Hint: K20 += nQ ag al ak i) Q = AKU ii) Q = AKL b) Consider the following bivariate utility function 3 U(x,y) = 25x3y} y i) Find the MU, and MU, ii) From the results, find the MRS between the two goods

A discriminating monopolist producing a single product is faced with the following two demand functions from each of the two markets Pa = 25 - 2Q. 3 P2 = 40 - 502 The monopolist has the following total cost function C = 60+4Q i) Q = Q1 + Q2 Find the profit-maximizing levels of outputs and prices In the absence of price discrimination, what would be the profit-maximizing levels of output and price? ii)