Economics of Enterprise Answers

Suppose Q gives the production function Q=150KL and the price of labor and capital is 2.5 and 6 birr respectively. If the total outlays of the firm is 3000 Birr. Determine the level of employment of both inputs that maximizes output.

Suppose that cost function is of a firm is given by C=Q³-4Q²+14Q+60. Then ,determine

a. Fixed Cost function and AFC at Q=2

b. TVC function and AVC at Q=2

c. MC function and MC at Q=2

d. Minimum average cost

Suppose the short run production function can be represented by

Q = 60,000L²– 1000L³. Then, determine

a. The level labor employment that maximizes the level of output

b. The level of employment that maximizes AP_L and the maximum AP_L

Price increases from $10 to $12 and the price elasticity of demand is -0.5. The quantity demanded is 450 units. What was it before?

Suppose you have the following production function: Q = f (L, K) = 10L ^½ K^½. In addition, the price of labor is $1 and the price of capital is $4

a. What is the optimal amount of labor and capital if you want to produce 20 units?

b. What is the level of minimum cost ?( Ans L=4 and K=1,Min C=$8)

Suppose the perfectly competitive price is given as $46 and the total cost of the firm is given by TC=14X+2X², find

a. The profit maximizing level of output for the firm?

b. The profit of the firm?

Imagine a perfectly competitive firm producing good A with cost function

TC=400+20Q-2Q²+2/3Q³, where Q is quantity produced

a. determine the firm’s short run supply curve

b. What is the profit maximizing level of output when price of A is birr 180?

Assume the price of cigarettes increases by 50% due to a new law that raises the tax on

cigarettes. In the short run, PED for cigarettes is 0.3. By what percentage will the

quantity demanded fall following a 50% increase in the price?

If the fixed cost of manufacturing a product is ETB 10, 000 and the marginal cost at Q units of output is ETB(60+2.5Q). Find: 

a. The function for the total cost of manufacturing x units.

 b. The total cost of 200 units.  

The marginal cost of a trader has been found to be MC = 3Q² + 8Q + 400 . Determine the total variable cost of producing 100 units of the trade’s product.