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a) Determine the Fixed Cost, Average Variable cost, and Marginal cost functions for a firm whose total cost function is defined by
C = 36x-10x^2+2x^3
a) In an Economy, the consumers are known to consume 40% of their disposable income, while if they earned no income, they would consume commodities worth 50 million shillings. The government takes 50% of consumers’ income in form of income tax while the other sources contribute 105 million shillings to the government. The government spends 250 million shillings on its projects. The rest of the information concerning the economy is as follows:
i) Identify the endogenous variables in the models of this economy (3 mark)
Drive the IS and LM equations for the economy described above
Consider the market for minivans. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply increase or decrease. Then draw a diagram to show the effect on the price and quantity of minivans.
a.People decide to have more children
b.A strike by steelworkers raises steel price
c.Engineers develop new automated machinery for the production of minivans
d.The price of sports utility vehicles rises
e.A stock-market crash lowers people's wealth
Lomar Corp. produces two types of generators – diesel and gas turbine. The revenue and cost functions are given as follows: 𝑅(𝑥,𝑦)=2𝑥+3𝑦 𝐶(𝑥,𝑦)=𝑥2−2𝑥𝑦+2𝑦2+6𝑥−9𝑦+5
where x is the quantity of diesel generators and y is the quantity of gas turbine generators. Both revenue and cost are measured in millions of ringgits.
(a) Determine the profit-maximising output level. How many of each type of generators should Lomar Corp. produce to maximise profit?
(10 marks)
(b) Determine the total profit generated by the optimal output level as in (a) above. What is the maximum profit?
(2 marks)
(c) Determine whether Lomar Corp. is operating in the short run or long run. Explain.
(3 marks)
Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts.
a) A hurricane in South Carolina damages the cotton crop
b) The price of leather jackets falls
c) All colleges require morning exercise in appropriate attire
d) New knitting machines are invented
What is a possible drawback of using R2 for comparing different models with the same dependent variable and different number of explanatory variables? Why using adjusted R2 for model evaluation may be better?
Explain what does the expression “OLS is BLUE” mean. State Gauss-Markov assumptions
required for OLS estimator to be BLUE.
What are the implications of high multicollinearity for the OLS estimators of slope coefficients in Multiple Linear Regression model and their variances?
Compare how resources are allocated in market and mixed economic system
1. Demand for grain is given by function Qd=9-4P and supply - by function Qs=2P. The government also entered the market and bought 6 units of the grain. Which equilibrium price will be established in this market and how much grain will be sold?
2. Price elasticity of demand and income elasticity of demand are accordingly -0,4 and 1,1. The changes in price and income accordingly amounted to 12% and -5%. Find the percentage change in quantity demanded.
3. Price elasticity of demand, last sale, last price, and initial price accordingly are -1,5; 20; 10; 40. Find the initial sale.
