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Discuss the income and substitution effect of a price change in case of a normal good?
Q-2 Assume that the market for soaps in a small closed economy is initially characterized by the following domestic demand and domestic supply equations where Q is quantity and P is price.
Demand: Q = 120 – 2P & Supply: Q = 4P – 48. Find the equilibrium price, quantity, consumer surplus & producer surplus in the market for soaps.
A major bank in the country wants to launch a new investment scheme. However, they are not sure whether it will be a success of failure among the consumers. To arrive at a conclusion, they may outsource the research activities to a well-known research firm in the city. The bank has asked the firm to submit a research strategy by the end of the coming week so that the bank can decide if it would be feasible for them to move further. Answer the following questions: What is the purpose of having a research strategy? Discuss the various research strategies that you know about.
why does the government collect taxes from businesses and households?
suppose we are given a production function: q=[alp +(1-a)kp ]1/p
Please show that MPk=(1-a)(k/q)p-1 and MPl=a(l/q)p-1
Please derive the RTS
Please derive the elasticity of substitution a.
Does this production function exhibit constant, increasing, or decreasing returns to scale?
suppose the production function for trucks is given by: q=kl+6l2 -(1/3)l3
where q represents the weekly quantity of trucks produced, k represents weekly capital input, and l represents weekly labor input.
a. Suppose k = 45; at what level of labor input does this average productivity reach a maximum? How many trucks are produced at that point?
b. Again assuming that k = 45, at what level of labor input does the total production reach a maximum? How many trucks are produced at that point?
A firm estimated its AC curve last year and found that AC = 1000 – 0.05 Q. This year it estimated its ACs and found that they were AC = 900 – 0.05 Q Are there increasing or decreasing returns to scale?
Q = - 50 + 10 L – 0.02 L2
1) Find out MP
2) Find out AP
3) At what level of labor input does the AP curve reach its maximum? What is the MP at this input level?
1.Suppose an isoquant for a particular production process were so tightly curved that it was almost L-shaped. What would this imply about the technology?
2.Why is the TP of labor curve never downward sloping?
3.If MP is declining, is AP always declining? Why or why not?
A businessman uses K and L to produce X. Production function is: Q = 2K ( L – 2 )
PK = 600, PL = 300, TC = 15000
a) Determine marginal product function ( MP) of K and L. Determine MRTS
b) Determine Qmax
c) If he wants to produce 900 units, find out TCmin.
