Economics Answers

(d) The table below shows the marginal utility schedule for orange (X)      and apples (Y). Suppose that oranges and apples are the only two  commodities available, the price of orange is Shs 10 , the price of   apple            is Shs 10, and individual income is Shs 800 per time period and all is spent.

Quantity

Marginal utility of X

Marginal Utility of Y

10

20

30

40

50

60

70

110

100

90

80

70

60

50

190

170

150

130

120

100

80

           Required:

(i)    How many units of good X and good Y will this utility maximizing consumer buy if the level of income is Shs 14                                                                                  (3 marks)

how to depict equilibrium price & quantity on a graph and interpret

In most economies of the world, is the short-run Phillips curve hypothesis still relevant? What about the long-run hypothesis?

Discuss

Ralph advertises to sell cookies for Php 200 a dozen. He

sells 75 dozen and decides that he can charge more. He raises the price

to Php 300 a dozen and sells 45 dozen. What is the elasticity of demand?

𝑄𝑑 = 1100 − 3P

Using the equation, find the quantity demand if the price is 180

𝑃 = −𝑄𝑑 + 700

Using the equation, find the quantity demand if the price is 0

𝑄𝑑 = 500 − 4p

Using the equation, find the quantity demand if the price is 25

The demand function is p = 100/q and an increase in price reduces quantity demanded from q = 10 to q =5. Compute the lost consumer surplus (CS). First draw a diagram that illustrates the lost CS. Then integrate with respect to 𝑝 (the variable on the vertical axis) after finding

(1) the inverse demand function , 𝑞 =𝑓 (𝑝) and

(2) the endpoints of integration (corresponding to q = 10 to q = 5 ) on the

𝑝 axis .

What is Qs of Qs=21+2, when price is 3.25?

A business started 1 April 2014, and incurred the following costs during its first two years.

Year ending 31 March  2014    2015

Direct materials            60,000 49,900

Direct labour               48,000 44,000

Variable overheads       24,000 30,000

Fixed costs                 40,000 40,600             

Production each year  16,000    14,000

Sales each year    14,000          14,000

Do:

Prepare a statement showing the gross profit for each of the three years if the company used:

The marginal costing approach to valuing  inventory;   

The absorption costing approach to valuing inventory. 

Advantages and disadvantages of using each method