Economics Answers

An economist estimated that the cost function of a single-product firm is:

C(Q) = 80 + 20Q + 25Q² + 5Q³.

Based on this information, determine the following:

a. The fixed cost of producing 10 units of output.

$ 

b. The variable cost of producing 10 units of output.

$ 

c. The total cost of producing 10 units of output.

$ 

d. The average fixed cost of producing 10 units of output.

$ 

e. The average variable cost of producing 10 units of output.

$ 

f. The average total cost of producing 10 units of output.

$ 

g. The marginal cost when Q = 10.

$ 

In the aftermath of a hurricane, an entrepreneur took a one-month leave of absence (without pay) from her $6,000 per month job in order to operate a kiosk that sold fresh drinking water. During the month she operated this venture the entrepreneur paid the government $3,000 in kiosk rent and purchased water from a local wholesaler at a price of $1.40 per gallon. If consumers were willing to pay $2.30 to purchase each gallon of fresh drinking water, how many units did she have to sell in order to turn an economic profit?

2: With hundreds of millions of people still living in extreme poverty, what are the causes and what policies have been most effective for improving the lives of the poorest of the poor?

Let X1, X2, . . . , X100 be a random sample from a population with population mean equal to 100 and population variance equal to 225. Compute the (approx- imate) probability that X¯ 100 is not in the interval [99, 101]. Which theoretical result underlies your calculation? 

Consider an experiment where a fair six-sided dice is tossed one time. Let Y be the random variable which equals 0 if the dice is three or less, and 1 otherwise. Calculate the expectation and variance of Y .

Suppose we have pairs of numbers (x1, y1) = (1, 1),(x2, y2) = (2, 2) from the variables x and y. Compute the correlation for this pair of numbers. Explain why your conclusion makes sense.

Suppose we have numbers x1 = 1, x2 = 1, x3 = 1. Compute the standard deviation of these numbers, and explain why your conclusion makes sense

Explain the following concepts.

a. Explain the substitution and income effects of a price change for a normal good and an inferior good.

b. List and explain three reasons why the demand for a good or service may be elastic. List and explain three reasons why the demand for a good may be inelastic.

c. Describe quantity and revenue responses to price changes when the price elasticity of demand (ϵ) takes on the following values:

(i) ϵ = 0,

(ii) 0 > ϵ > -1,

(iii) ϵ = -1,

(iv) ϵ < -1

The estimated equation for the Japanese Densuke Watermelon supply curve is Q = 100 + 0.8 p

where p is the price in dollars per kilogram and Q is the quantity supplied in tons per year. What is the price elasticity of supply at the points on the supply curve where the prices are p = $10 , p = $20, p = $200, and p = $500 and p → $∞ per kg? Draw the supply curve and show these elasticities on the diagram.

Suppose demand for inkjet printers is estimated to be Q = 500 – 0.6 p -5 px + 4 pz + 0.2 Y. where p is the price of inkjet printers, Y is income, and px and pz are the prices of related goods, X and Z. Suppose that p = 40, px = 25 , pz = 100 , and Y = $50, 000. Answer the following questions: 

a. What is the price elasticity of demand? Interpret and explain your results.

b. What is the cross price elasticity with respect to commodity X? Interpret and explain your result and give an example of what commodity X might be.

c. What is the coss price elasticity with respect to commodity Z? Interpret and explain your result and give an example of what commodity Z might be.

d. What is the income elasticity? Interpret and explain your result.