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he price of running shoes is above the equilibrium price, there will be an excess supply of running shoes.
12. The Central Publishing Company is about to publish its first reference book in mana-
gerial economics. It is now in the process of estimating costs. It expects to produce
10,000 copies during its first year. The following costs have been estimated to correspond
to the expected copies.
a. Paper stock $8,000
b. Typesetting $15,000
c. Printing $50,000
d. Art (including graphs) $9,000
e. Editing $20,000
f. Reviews $3,000
g. Promotion and advertising $12,000
h. Binding $22,000
i. Shipping $10,000
In addition to the preceding costs, it expects to pay the authors a 13 percent royalty and
its salespeople a 3 percent commission. These percentages will be based on the publisher’s
price of $48 per book.
5. Explain the distinction made in economic analysis between the short run and the
long run.
4. “If it were not for the law of diminishing returns, a firm’s average cost and average variable
cost would not increase in the short run.” Do you agree with this statement? Explain.
Given the following Demand and supply function: Qd = 12 - P and Qs = 8.4 + 0.5P ,
then answer the following questions.
i. Calculate the market clearing price and quantity.
ii. Determine, whether surplus or shortage exist at price level of 2 birr and 3 Birr.
iii. Compute price elasticity of demand and supply at equilibrium level of price and
quantity
iv. Determine the nature of price elasticity of demand and supply and interpret the result.
An employee obtained a loan of P100,000 at the rate of 6% compounded in order to build a house. How much must he pay monthly to amortize the loan within a period of 10 years?
plot the supply and demand curve Qd= 3000-10P Qs=-10000 + 10P
The present value of ₱ 1,000 to be received at the end of 8 years is ₱ 800. (a) What is the accumulated value of ₱ 800 at the end of 10 years? (b) If the interest rate adjusted to inflation is 7.97%, what is the inflation rate in this problem?
You are an analyst employed by a yacht manufacturer that last year sold 30,000 luxury yachts at $500,000 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 +2.6; and
iii) the cross price elasticity for your aircrafts with respect to the price of a comparable jet manufactured by a competitor is +1.4.
Now suppose that the only change you expect is a 6% increase in the price of your aircraft. Estimate sales this year and discuss the impact on total revenues. (5 MARKS)
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The market supply curve is the horizontal sum of all the individual supply curves.
#339914 on Dec 2023