Other Economics Answers

Why is Ricardo's explanation of the law of comparative advantage unacceptable? What acceptable theory can be used to explain the law?

What is the exception to the law of comparative advantage? How prevalent is it?

In the absence of trade, a nation's production possibility frontier is also its consumption frontier. with trade, each nation can specialize in producing the commodity of its comparative advantage and exchange part of its comparative disadvantage. By so doing, both nations end up consuming more of both commodities than without trade. With complete specialization, the equilibrium-relative commodity prices will be between the pretrade-relative commodity prices prevailing in each nation

Using the standard production function, Y = f(K, L, R, T), and holding the resource base fixed, we can derive the result that: y - n = α(k - n) + t , where y = rate of GNI growth, n = rate of labor force (population) growth, k rate of growth of the capital stock, α capital elasticity of output (usually found to be constant), and t the effect of technological change (the Solow residual in empirical studies of sources of economic growth)

Show how the above result is obtained using the production function.

What is the basic difference between cardinal and ordinal approaches of utility?

Which of the following is incorrect statement? *

Engineering Economics assesses economic viability of alternative feasible engineering alternative

Engineering economic solves the problem of uncertain future

Engineering economics supplements the task of accountant

Engineering economics reveals which cost and benefits need to be taken unto account in a specific case

A company has the capacity that can be used to produce a steel cup-board which it has been buying for Rs. 2000 each. If the company makes the steel cup-boards, it will incur materials cost of Rs. 800 per unit, labour costs of Rs. 400 per unit, and variable overhead costs of Rs. 200 per unit. The annual fixed cost is Rs. 25,00,000. Demand over the next year is estimated at 8,000 units. Would it be profitable for the company to make the steel cup-boards?

Explain briefly and give practical example on the following concepts. (3 points)

a) Explicit cist

b) Implicit cost

c) External cost

d) Social cost�

A consumer has $100 to spend on two goods X and Y with prices $3 and $5 respectively. Derive the equation of the budget line and sketch the graph

3. A cloth producing firm in a perfectly competitive market has the following short-run total cost function: TC = 6000 + 400Q – 20Q2 + Q3 . If the prevailing market price is birr 250 per unit of cloth,

A) Should the firm produce at this price in the short-run?

B) If the market price is birr 300 per unit, what will be the profit (loss) of the firm at equilibrium? Should the firm continue to produce or not?

C) Calculate the shut-down price of this firm?

4. Assume a wheat producing farmer engaging in selling its product under perfect competition market faces cost functions as TC= Q3 -2Q2 +8Q and Average revenue of the farmer is given as Birr 8 . Having this information, A) Determine the optimal level of output and price in the short run.

B) Calculate the economic profit (loss) the farmer will obtain (incur)

C) What will be the minimum price level the farmer gets to continue in wheat production?