Economics Answers

1: Why do some countries make rapid progress toward development while others remain desperately poor?

Examples of monopoly products in Ebay, Amazon and Lazada Philippines

There is monopolistic competition in the shampoo market. One of monopolistic firms

- DG. Company offers a special shampoo. Over a long period of time, G's total costs

(CK) of this special shampoo production (hi) are expressed by the following function

TC=3q3 - 27q? +100q. DG's total revenues (CZK) are given by the following quadratic

function TR = 63.25q - 6q?.

a) What amount of shampoo will DG produce?

b) What price will DG charge?

c) What profit will DG generate?

d) Present all results in an appropriate microeconomic model of G's behaviour.

You are an analyst employed by an airplane manufacturer that last year sold 40,000 ATR-72

aircrafts at $100,000 each. Your market research indicates that:

I. the price elasticity of demand for your aircrafts in −0.5. (or +0.5 in absolute value);

II. the income elasticity of demand for your aircrafts is +3.7; and

III. the cross price elasticity for your aircrafts with respect to the price of a comparable jet

manufactured by a competitor is +1.6.

A. Suppose that you expect a ceteris paribus decrease in average incomes of 10% this

year compared to last year. How many aircrafts do you estimate that your company will

sell this year? How will it impact total revenues? 6 marks

B. 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?

Now suppose that the only change you expect is a 7% increase in the price of your

aircraft. Estimate sales this year and discuss the impact on total revenues.

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?

Suppose that you expect a ceteris paribus decrease in average incomes of 10% this

year compared to last year. How many aircrafts do you estimate that your company will

sell this year? How will it impact total revenues?

Suppose that you expect a ceteris paribus decrease in average incomes of 10% this

year compared to last year. How many aircrafts do you estimate that your company will

sell this year? How will it impact total revenues?

Consider the following situation for Upland and Downland. Each country half of its resources in Banana and half in Apple.

Apple. Banana

Upland 450 80

Downland 60 60

a. Does the figure represent Absolute or Comparative advantage or both?

b. What is the opportunity cost of apple for each country?

c. By how much will total output increase when the countries ( Download and Upland) specialize.

1. Differentiate between Absolute cost and Comparative cost advantage theories of International trade.

2. Explain reasons why countries engage themselves in trade.

3. Explain the range of trade protection instruments use in Nigeria.

4. Explain the main components of Balance of Payments.

5. Consider the following situation for Upland and Downland. Each country half of its resources in Banana and half in Apple.

Apple Banana

Upland 450 80

Downland 60 60

a. Does the figure represent Absolute or Comparative advantage or both?

b. What is the opportunity cost of apple for each country?

c. By how much will total output increase when the countries ( Download and Upland) specialize.