Economics of Enterprise Answers

The fundemental problem in economics is...

The following table showed the cross price elasticities between price of product X with the quantity demanded for product Y, Z, R, and S, respectively.

       Types of Product            cross price elasticities     Y2.5Z0.1R-0.5S0.0

The conclusion is _________________________.

Select one:

a.

product Y and X is complement product.

b.

R and X is complement product. 

c.

Product X and R is substitution product.

d.

Y and S is substitution product.

A firm currently employs 30 workers at a daily wage rate of $40. It calculates that the marginal cost per day of hiring an additional worker would be $102.

By how much would the daily wage rate have to be increased to attract an extra worker?

The schedule shows the short run marginal costs of producing good X.

Units of X 1 2 3 4 5

Marginal cost ($) 40 30 30 60 120

Given that the total fixed cost is $20, calculate the level of output which minimises Average Total Cost (ATC).

suppose the shortrun market price a competitive firm faces is birr 9 and the total cost of the firm is tc-200+q+0.02qanswer the quetions follow

a)calculate the short run equilibrium out put and profit of the firm

b)drive the mc atc and avc

A heat exchanger is being installed as part of a plant modernization program. It costs $80,000, including

installation, and is expected to reduce the overall plant fuel cost by $20,000 per year. Estimates of the

useful life of the heat exchanger range from an optimistic 12 years to a pessimistic 4 years. The most

likely value is 5 years. Assume the heat exchanger has no salvage value at the end of its useful life.

Determine the pessimistic, most likely, and optimistic rates of return.

The table shows the output of chairs at a factory when different numbers of workers are employed.

Number of workers 1 2 3 4 5

Number of chairs produced 6 17 27 32 30

Show where diminishing marginal returns to labour will set in.

The table shows a firm’s total and marginal costs.

Output Total cost ($) Marginal cost ($)

1 200 20

2 215 15

3 225 10

4 240 15

5 260 20

Calculate the Average Fixed Cost (AFC) of producing 6 units of output.

Q=20 - I/2 P

•Where Q is the monthly quantity demanded of compact discs (CDs) in million and P is their price.

–Draw a demand curve given by this equation between CD prices of £1 and £20

–A new format results in a fall in demand of CDs of 5 million per month at any given price

–What is the new formula for quantity demanded of CDs? 

–Plot the new demand curve on your diagram.

The table shows the production of a firm.

Production (tonnes) Total Cost ($)

0 20

1 30

2 35

3 40

4 45

5 50

Calculate the Average Variable Cost (AVC) of producing 5 tonnes of output.