A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20. (i) Write down the equation of the budget line. (ii) How much of good 1 can the consumer consume if she spends her entire income on that good? (iii) How much of good 2 can she consume if she spends her entire income on that good? (iv) What is the slope of the budget line?
Discuss the central problems of the economy.
The central problems of an economy are
i) What to produce?
ii) How to produce?
iii) For whom to produce?
Distinguish between a centrally planned economy and a market economy.
What is a production possibility frontier in terms of economics?
An improvement in production technology will:
A. increase equilibrium price.
B. shift the supply curve to the left.
C. shift the supply curve to the right.
D. shift the demand curve to the left.
QD = 200 -2P + ½Y
QS = 3P – 100
Given the above Demand and Supply functions, what is the impact on the Market Equilibrium of Y increasing from 0 to 20?
QD = 132 – 8P
QS = 6 + 4P
(i) Find the equilibrium P and Q.
(ii) How does a per unit tax t affect outcomes?
(iii) What is the equilibrium P and Q if unit tax t = 4.5?
State and explain the tools of monetary policy that may be used by a government to reduce excess money in circulation.
state and explain circumstances under which a firm may acquire monopolistic power in the market.
The demand function for a good is given as Q = 130-10P. Fixed costs associated with producing that good are €60 and each unit produced costs an extra €4.
i). Obtain an expression for total revenue and total costs in terms of Q
ii). For what values of Q does the firm break even
iii). Obtain an expression for profit in terms of Q and sketch its graph
iv). Use the graph to confirm your answer to (ii) and to estimate maximum profit and the level of output for which profit is maximised.
What is the profit maximizing level of output for a firm with the marginal cost function MC = 1.6Q2-15Q+60 and a marginal revenue function MR = 280-20Q?
A firms demand function for a good is given by P = 107-2Q and their total cost function is given by TC = 200+3Q .
i). Obtain an expression for total revenue profit in terms of Q
ii). For what values of Q does the firm break even.
iii). llustrate the answer to (ii) using sketches of the total cost function, the total revenue function and the profit function.
iv). From the graph estimate the maximum profit and the level of output for which profit is maximised.
How does advertising campaign impact monopolistic competition? Explain briefly.
Why does a shift in perceived demand cause a shift in marginal revenue for monopolistic competitive firms?
Monopolistic competition is said to be inefficient. Give reasons of its market inefficiency.