Economics of Enterprise Answers

 The cost of producing a certain item consist of P102 per unit for labor and material cost and P54 per  unit for other variable cost. The fixed cost per month amounts to P850,000. The item is sold at P740 each. 

a. Determine the break-even quantity per month. 

b. How many units must be produced each month in order that the net profit equals the cost?

c. What is the net profit it for a production of 4,000 units per month, in pesos? 

given the production Q=L^1/2 K^1/2 price per unit of K and L is birr 2 and birr 4 respectively and total cost is birr 80 a) determine the maximum output subject to the cost constraint b)caculate the MRTS_l,k at equilibrium point

what is a toll bridge characterized by

a) The commodity and money markets of Juja farm, a hypothetical economy are as given below: Commodity Market Y = C + I C = 1000 + 0.8Y I = 2000 – 0.75r Money Market Lt = 0.25Y (Transactions and precautionary demand for money function) Ls = 1000 – 0.5r (Speculative demand for money function) Ms = 3200 (Money supply function) Required: i) Mathematically derive both IS and LM curves. (6 marks) ii) Derive the equilibrium level of Income and rate of interest. (4 marks) iii) If the money supply is increased by 80, what would be the effect on the equilibrium level of income and rate of interest in Juja farm economy? 

Case Study 1 – The Economic Daytime Running Light 

75% of driving takes place during the daytime. 

2% of fuel consumption is due to accessories (radio, headlights, etc.). Cost of fuel = $4.00 per gallon. 

Average distance traveled per year = 15,000 miles. 

Average cost of an accident = $2,800. 

Purchase price of headlights = $25.00 per set (2 headlights). 

Average time car is in operation per year = 350 hours. 

Average life of a headlight = 200 operating hours. 

Average fuel consumption = 1 gallon per 30 miles. 

Answer the following set of questions: 

1. What are the extra costs associated with driving with headlights on during the day? 

2. What are the benefits associated with driving with headlights on during the day? 3. What additional assumptions (if any) are needed to complete the analysis? 4. Is it cost effective to drive with headlights on during the day?

Froyd Review & Training Center Inc. is expanding its school facilities starting 2001.  The program requires the following estimated expenditures: 

P1,000,000 at the end of 2001 

P1,200,000 at the end of 2002 

P1,500,000 at the end of 2003 

To accumulate the required funds, it establish a sinking fund constituting of 15 uniform  annual deposits, the first deposit has been made at the end of 1992. The interest rate of  the fund is 2% per annum. Calculate the annual deposit.

Define Supply and Law of Supply giving examples of how determinants of Supply can change the quantity supplied.

MC 2) The Ricardian model suggests that

real wages increase along with a country’s

a) comparative advantage

b) absolute advantage

c) endowment of capital

d) use of prohibitive tariffs

The government defines poverty as living without the basic human needs

due to an inability to afford them. Which of the following is not listed as

one of those basic human needs?

The monthly demand for ice cans being manufactured by Mr. Alarde is 3200 pieces.  With a manual operated guillotine, the unit cuffing cost is P25.00. An electrically operated  hydraulic guillotine was offered to Mr. Alarde at a price of P275,000.00 and which cuts by  30% the unit cuffing cost. Disregarding the cost of money, how many months will Mr. Alarde be able to recover the cost of the machine if he decides to buy now?