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Suppose Peter buys Good X and Good Y only. The price of Good X is $1 per unit and the price of Good Y is $2 per unit. Peter has the weekly income of $1000. Suppose the utility function of Peter is U = 3XY and the slope of his indifference curve is –Y/X where X and Y are the quantity of Good X and Good Y in a bundle respectively. a. What is the utility level of Bundle A with 200 units of Good X and 200 units of Good Y? Show your workings. [5 marks] b. Bundle B has 100 units of Good X and 300 units of Good Y. Is Bundle A preferred to Bundle B? Explain your answer. [5 marks] c. Is Bundle A affordable to Peter? Clearly explain your answer. [5 marks] d. Solve for the utility maximizing bundle. Show each of your steps clearly. [10 marks]
Assume a labor market with a non-discriminating monopsony. Assume the wage is 5$ when monopsony employs 100 workers. Assume wage increase to 5,1$ when 1 more worker is employed. What is the marginal labor cost of the last worker?
“Healthy Ltd” is a small producer of potatoes. The potatoes market is a competitive industry populated by a large number of small firms. At present the industry is away from its “long-run” equilibrium and Healthy Ltd is making economic losses. a) Draw a graph showing the market demand for and supply of potatoes and illustrate the current position of Healthy Ltd. Is it certain that Healthy Ltd will cease to produce potatoes? Explain your answer. b) How will the market for potatoes adjust in the long-run and in what sense will the long-run equilibrium prove efficient? c) How will the market adjust to a serious study that reveals the health benefits of potatoes? Explain using appropriate analysis.
You are given the following information about a shop attendant that says: when the price of pepsi was Ghc 2 the quantity demanded of pepsi was 10 bottles a month and the quantity demanded of mirinda was 20 bottles per month. When the price of pepsi decreased to Ghc1, the quantity demanded of pepsi increased to 25 bottles a month and the quantity demanded of mirinda decreased to 5 bottles a month. It was also realized that her monthly income increased from Ghc 100 to Ghc 150. i. Is pepsi an elastic or inelastic good? ii. What type of good is pepsi and mirinda? iii. What is the relationship between pepsi and mirinda?
Differenciate 2√XY
One of the major complaints of the British people for Brexit is, the argument that labor mobility enforced by EU on England, cause wage level of British workers to fall. Assume this claim of British citizens is correct. Show on two seperate graphs, one representing British labor market, the other labor market of the rest of EU. And show the effect of labor mobility in both markets. Explain in a few words the reason behind this process.
1. For a office building, marginal benefit and marginal cost of an additional floor for a builder is given by,
Explain the concept of market equilibrium and use a demand and supply diagram to show the equilibrium? Use demand and supply diagrams to analyse changes to price and quantity following changes in demand and supply? Explain how changes in the equilibrium price and quantity are influenced by the elasticity of demand and supply? Explain the difference between shortage and surplus?
Net and Red each expect gross profit of 100,000 in the coming year. Net thinking that it would like to see its net profits rise by more considers advertising during Super bowl. An ad will cost 80,000. If Net advertises and Red does not, Net expects its gross profits to rise by 230,000 while Reds profits will only rise 50,00 instead of 100,000. If both firm advertise their profits will rise the same as if neither advertised, except they spent 80,000 for the ad. Create a profit matrix only including net profits.
Describe some of the opportunity cost when you decide to do the following : 1. Attend university instead of taking a job. 2. Watch a movie instead of studying for a quiz. 3. Ride commercial bus instead of driving your own car. 4. More people choose to get graduate degree when the job market is poor. 5. More people choose to do their own home repair when the economy is slow and monthly salaries are down . 6. Few students enrol in lectures that start before 6:30 am
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