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Explain the price effect, income effect and substitution effect of a price change for a normal
commodity using suitable diagram.?
Following information shows that a firm offering a good at different prices to groups of consumers with different levels of willingness to pay.
Inverse Demand for movies: P1 = 20 – 4Q1
Inverse Demand for students: P2 = 10 – Q2
MC = 4
(a) What price and quantity and maximizes profits if the firm charges each market?
(b) Demonstrate that charging different prices for the two groups results in higher profits than charging the same price for everyone.
disscuss mathematically graphically and ecnomically the major reason behind a comparatively steeper LMschedule
Explain how production possibility curve illustrates scarcity,choice and oppourtunity cost
Following information shows that a firm offering a good at different prices to groups of consumers with different levels of willingness to pay.
Inverse Demand for movies: P1 = 20 – 4Q1
Inverse Demand for students: P2 = 10 – Q2
MC = 4 LKR /ticket
(a) What price and quantity and maximizes profits if the firm charges each market?
(b) Demonstrate that charging different prices for the two groups results in higher profits than charging the same price for everyone.
(c) Graph the demand curves, the marginal revenue curves, the marginal cost curve and highlight the equilibrium.
Suppose perfect competitive firm short run cost function
total cost=1/3q3+3q2+10Q+40
. if the market price of the commodity is birr 26 per unit
A, determine the profit maximizing level of out put
B find average fixed cost ,average cost ,average variable cost and marginal cost of firm at optimum level of out put
C find maximum profit of the firm
what kinds of entry barriers helped protect intels monopoly positions? What actions dis intel take to impede market entry?
suppose that the demand curve facing opec is given by p= 120-2q and that each member's cost of producing oil is ac=mc= $20. find the cartels profit maximizing total output and price. If instead of keeping to this output, all members overproduced their quotas by 20 percent,what would be the effect on OPECS total profit
PROBLEM 1
Use the following news clip to work Problems 21 to 23.
Hong Kong Overflowing in Cash
In 2017, Hong Kong’s government debt was 43.9 percent of its nominal GDP. In the same
year, it witnessed a budget surplus of HK$138 billion. In March 2018, Paul Chan, Hong
Kong’s financial secretary, promised to return 40 percent of the surplus to the community
but stressed the importance of saving for the future.
Source: Bloomberg and ceicdata.com, March 2018
21. How does Hong Kong have a high debt percentage while also enjoying a large
surplus? How does debt financing affect monetary policy?
22. How would the budget surplus be affected if Hong Kong’s central bank decreased
interest rates?
23. a. How would Hong Kong’s budget surplus change in the 2018 and 2019 if its central
bank moved interest rates up?
b. How would Hong Kong’s budget deficit change in 2018 and 2019 if its central
bank’s monetary policy led to a rapid appreciation of the Hong Kong dollar?
Malaysia’s Central Bank Raises Interest
In January 2018, Bank Negara Malaysia (BNM), Malaysia’s central bank, raised its
interest rates for the first time since July 2014. Economists speculated that it is a
one-time event and that that there won't be other interest rate hikes given that
Malaysia’s growth is steady and inflation is mild.
Source: Reuters, January 25, 2018
a. Why do you think some economists speculated that the interest rate hike is a one-
time event?
b. What would be the effects of BNM hiking the interest rate? Explain the immediate
effects and the ripple effects.
c. What could be the risks arising out of no interference from the central bank?
College of the North Atlantic – Qatar/ Fall 2021/JM 3 | Page
