Economics Answers

An example of Fiscal policy may include

a.A rising Fed Funds rate

b.Increasing money supply

c.Constructing a new highway

d.Raising the Reserve Requirement

A monopolist produces a good that consumers demand according to the function P (Q) = 226 - 1/2Q. The firm's total cost function is TC (Q) = 42Q + 12, 500, with constant marginal cost MC (Q) = 42. Initially, the firm maximizes their profits by charging one price to consumers. The firm will produce output, where each good will be sold for $ units of Later, the firm practices perfect first-degree price discrimination. The firm's new profit-maximizing output level is The firm will earn total revenue equal to $ Compared to the single-price monopolist equilibrium, the amount of DWL in the market will when the monopolist practices perfect first-degree price-discrimination. Choose from: increase, decrease, remain the same. Make sure you are typing in your answer exactly as provided in the answer options. Next

Given the money demand function, [M P] a bi Y D ln = − + ln , if b = 1 3 and S = 0.03Y , what rate of

money growth is required to obtain it? How will your answer(s) change when: (a) b = 1 3 and S = 0.05Y

Explain the relationship between seigniorage revenues and the rate of inflation. Als

7. Assume Amanda always maximizes her total utility given her budget constraint. Every morning for breakfast she has four eggs and two sausages. If the marginal utility of the last egg is 10 units and the price of eggs is $2 each, what can we say about the marginal utility of the last sausage if the price of each sausage is $2?

A. It must be equal to 10 units.

B. It must be equal to 5 units.

C. It must be equal to 1 unit.

D. It must be equal to 20 units.

1.Started business with cash rs . 12,00,000

2. Bought Furniture for cash rs . 100000

3. Bought Building for cash Rs. 102000

4 . Bought Good for rs. 140000 on credit from Ahmad .

5. Sold Goods for cash rs.150000

6. Paid salary for RS. 15000.

7. Paid commission for RS . 10000.

8. Received rent for RS . 4000

Recognize above business transactions .

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:

Price Quantity Demanded (Business travelers) Quantity Demanded (Vacationers)

$150 2,100 tickets 1,000 tickets

200 2,000 800

250 1,900 600

300 1,800 400

a) 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 midpoint method in your calculations.

b) Why might vacationers have a different elasticity than business travelers?

The mango float industry currently has 100 firms, each of which has fixed cost of USD 16 and average variable cost as follows:

Quantity                Average Variable Cost

1                              USD 1

2                              2

3                              3

4                              4

5                              5

6                              6

1. Compute a firm’s marginal cost and average total cost for each quantity from 1 to 6.
2. The equilibrium price is currently USD 10. How much does each firm produce? What is the total quantity supplied in the market?
3. In the long run, firms can enter and exit the market, and all entrants have the same costs as above. As this market makes the transition to its long-run equilibrium, will the price rise or fall? Will the quantity demanded rise or fall? Will the quantity supplied by each firm rise or fall? Explain your answers.
4. Graph the long-run supply curve for this market, with specific numbers on the axes as relevant.

7. Suppose that cost function is of a firm is given by C=Q ³ -4Q ² +14Q+60. Then , determine

a. Fixed Cost function and AFC at Q=2

b. TVC function and AVC at Q=2

c. MC function and MC at Q=2

d. Minimum average cost

8. Suppose Q gives the production function Q=150KL and the price of labor and capital is 2.5 and 6 birr respectively. If the total outlays of the firm is 3000 Birr. Determine the level of employment of both inputs that maximizes output.

5. Suppose you have the following production function: Q = f (L, K) = 10L ^½ K ^½ . In addition, the price of labor is $1 and the price of capital is $4

a. What is the optimal amount of labor and capital if you want to produce 20 units?

b. What is the level of minimum cost ?( Ans L=4 and K=1,Min C=$8)

6. Suppose the short run production function can be represented by Q = 60,000L ² – 1000L ³ . Then, determine

a. The level labor employment that maximizes the level of output

b. The level of employment that maximizes AP_L and the maximum AP_L

3. Imagine a perfectly competitive firm producing good A with cost function TC=400+20Q-2Q ² +2/3Q ³ , where Q is quantity produced

a. determine the firm’s short run supply curve

b. What is the profit maximizing level of output when price of A is birr 180?

4. Suppose the perfectly competitive price is given as $46 and the total cost of the firm is given by TC=14X+2X ² , find

a. The profit maximizing level of output for the firm?

b. The profit of the firm?