Economics Answers

 Assume now that you do not think incomes will change, but that you expect  your competitor will decrease his price by 4%. Assuming that your company  does not change the price of its aircrafts, how many would you expect your  company will sell this year?

Stuart's utility function for goods X and Y is represented as U(X,Y)=X0.8Y0.2. Assume that his income is $100 and the prices of goods X and Y are $20 and $10, respectively.

Now a government subsidy program lowers the price of X from $20 per unit to $10 per unit.

(e) Calculate and graphically show the change in good X consumption resulting from the program.

(f) Graphically show the change in consumption attributable to the separate income and substitution effects.

(g) Show (graphically) how much the program cost the government.

What is Accrued service revenue? How is it different from service revenue?

1. What is production

2. What is a production function

3. Define the following terms

(a) Average product (b) marginal product ( c) total product

4. Distinguish between short run and long run

5. Distinguish between increasing returns to scale, constant returns to scale, and

decreasing returns to scale?

6. Determine whether the following functions exhibit increasing returns, constant returns

and decreasing returns to scale and determine the degree of homegeneity

i. Q = 200 𝐾0.4𝐿0.6

ii. Q = 200 + 2K +4L

iii. Q = LK -0.8K2 -0.2L2

Qd = 20,000 - 3P Qs = 15,000 + 2P

calculate the equilibrium price and quantity

The price of matchboxes doubles from Rs.4 to Rs.6, but the quantity purchased does not change. d) A price change causes the quantity demanded of a good to decrease by 30 percent, while the total revenue of that good increases by 15 percent. Is the demand curve elastic or inelastic?

The table shows information about a profit maximising firm.

Output 17,000 units

Price per unit $1.75

Fixed costs $ 10,000

Variable costs per unit $1.70

Explain whether the firm should continue production.

The table shows the costs of two milk producers.

Cost per litre

Firm X $9

Firm Y $7

The price received by producers is $10 per litre. Both firms have been given quotas allowing them to produce 200 litres per day. Firm X sells its quota to firm Y.

Assuming constant costs of production and zero costs of entry and exit, calculate the price range which firm Y had to pay (per day) to buy X’s quota.

The table shows the inputs of two factors of production, capital and labour, needed to produce varying levels of output.

Output Capital Labour

100 5 10

200 8 16

300 14 28

400 20 40

500 26 52

Over which output range do increasing returns to scale occur.?

There are many hotel businesses in the Philippines that operate in a monopolistically competitive market. To what rent would a perfectly competitive market be more efficient than a monopolistically competitive market? illustrate ur answer with an appropriate diagram(s) (20m)