Economics Answers

Let the price of pizza (X) is $2 per unit and the price of shakes (Y) is $ 1

per unit. The budget is $ 38. Marginal utility of X is MUx = 100 – 10x,

marginal utility of Y is MUy = 80 – 10y. Find:

How many of quantity of each item should be purchased in order to get

a maximum satisfaction.

1. The population of the world in 2003 was 6.314 billion. It grew between 1975 and 2003 at an annual rate of 1.6%. Assume that it continues to grow at this rate. a. Compute the doubling time. b. Estimate the world population in 2048 and 2093 (assuming all other things remain unchanged). 2. With a world population in 2003 of 6.314 billion and a projected population growth rate of 1.1% instead (which is the United Nations’ projection for the period 2003 to 2015). a. Compute the doubling time. b. State the year in which the world’s population would be 12.628 billion. 3. Suppose a country’s population grows at the rate of 2% per year and its output grows at the rate of 3% per year. a. Calculate its rate of growth of per capita output. b. If instead its population grows at 3% per year and its output grows at 2% per year, calculate its rate of growth of per capita output. 

The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: 𝑄𝐷=10−𝑃 where P is the price of admission.

d) For the break-even price you found in part (c), calculate each resident’s consumer surplus. Compared with the mayor’s plan, who is better off with this admission fee, and who is worse off? Explain.

e) What real-world considerations absent in the problem above might provide reasons to favor an admission fee?

The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: 𝑄𝐷=10−𝑃 where P is the price of admission.

Suppose a hotel exhibits constant returns to scale as it increases its output. If it increases all its inputs by 10%, its:

select

A. total cost will increase by less than 10%

B. average total cost will increase by 10%

C. output will increase by 10%.

D. long run average cost curve will shift to the right by 10%

Stackelberg model) In a duopoly industry, there are only 2 firms, firm 1 is the industry leader, while firm 2 is the follower. Firm 1’s cost function is: C₁=1.2²q₂+2 , firm 2’s cost function is:C₂=1.5²q₂+8. The market demand function is: P=100-Y . In a typical Stackelberg model setting, firm 1 makes its production decision first, then firm 2 makes its own decision.

1. Given any q₁, what is firm 2’s best response/rection function?
2. Given firm 2’s best response function, what is firm 1’s best production decision?
3. What is the Stackelberg equilibrium?

A used car salesman purchases a car from its previous owner at a price of $4,500, although the owner was willing to sell it for as little as $4,000. The salesman later sells the car to a new buyer for $6,000, although that buyer was actually willing to pay up to $6,500.

What percentage of the value created by the trade is captured by the buyer who purchases the car from the used car salesman?

A monopolist has cost function TC=10+2Q, where TC is the total cost of producing Q units of output. Demand in this market is given by the equation Q=14-P , where P stands for the price. Calculate the profite that the monopolist will be marking.

(Stackelberg model) In a duopoly industry, there are only two firms, firm 1 is the industry leader, while firm 2 is the follower.

Firm 1’s cost function is: C₁=1.2q²₁+2,

firm 2’s cost function is: C₂=1.5q²₂+8.

The market demand function is:P=100-Y .

In a typical Stackelberg model setting, firm 1 makes its production decision first, then firm 2 makes its own decision.

1. Given any q₁ , what is firm 2’s best response/rection function?
2. Given firm 2’s best response function, what is firm 1’s best production decision?
3. What is the Stackelberg equilibrium?

A consumer spends all her income of £120 on the two goods A and B. Good A costs £10 a unit and good B costs £15. Set up a constrained optimization problem to find the combination of A and B that the consumer purchase to maximize utility where the utility function is 𝑈 = 4𝐴0.5𝐵0.5 ?