Reference no: EM131390110
Q1. a. Define the price elasticity of demand and discuss its relationship to revenue?
b. Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to lower tax rates for the goods that have very high price elasticities of demand (exceeding one).
c. Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to raise tax rates for the goods that have very low price elasticities of demand (less than one).
Q2. Use a demand/supply diagram to discuss why rice farmers may not benefit from an abundant harvest.
Q3. Suppose that the demand equation: P = 6 - Q and supply equation: P = Q.
a. Calculate the equilibrium price and quantity, and consumer surplus and producer surplus.
b. Calculate the price elasticity of demand at equilibrium.
Q4. Suppose that the demand data are:
and the supply equation is: P = Q.
a. Find the demand equation.
b. Calculate the equilibrium price and quantity, and consumer surplus and producer surplus.
c. Calculate the price elasticity of demand at equilibrium.
Q5. Consider the following cost data for a perfectly competitive firm:
|
Output (Q)
|
Total Fixed Cost (TFC)
|
Total Variable Cost (TVC)
|
|
1
|
100
|
120
|
|
2
|
100
|
200
|
|
3
|
100
|
290
|
|
4
|
100
|
430
|
|
5
|
100
|
590
|
a. If the market price is $160, how many units of output will the firm produce in order to maximize profit in the short run?
b. Specify the amount of economic profit or loss at the profit maximizing output level in the short run.
c. What will be the price and quantity for the long run equilibrium?
Q6. Suppose the wage rate is $10 per hour and the fixed cost is $20. The production information is as follows:
|
Labor (hour)
|
Output
|
|
0
|
0
|
|
1
|
2
|
|
2
|
4
|
|
3
|
6
|
|
4
|
8
|
Suppose the market is perfectly competitive, and the market price is $10.
a. Find out the profit maximizing output level at short run.
b. Specify the amount of economic profit or loss at the profit maximizing output level in the short run.
c. What will be the price and quantity for the long run equilibrium?
Q7. Suppose that the monopolist's demand is: P = 8 - Q, and marginal revenue is: MR = 8 - 2Q. The marginal cost is: MC = 2, and there is no fixed cost.
a. Find out the profit maximizing output level.
b. Specify the amount of economic profit or loss at the profit maximizing output.
c. Calculate the price elasticity of demand at the profit maximizing point and explain it.
Q8. Suppose that the market demand is: P = 10 - Q, and marginal revenue is: MR = 10 - 2Q. The marginal cost is: MC = 4 and average cost is: AC = 4.
a. If the market is under monopoly. Find out the profit maximizing price and output for this monopolist
b. Calculate its economic profit or loss at the profit maximizing output.
c. Calculate the price elasticity of demand at the profit maximizing point and explain it.
Q9. Which firm is more efficient, i.e., monopolist or competitive firm? Why?
Q10. Using AD/AS model and diagrams, discuss the short-run and long-run impacts of the following events on the price level and output of the domestic economy (starting from the full-employment level):
a. An increase in money supply
b. A rise in inward tourism
Q11. Using AD/AS model and diagrams, discuss the short-run and long-run impacts of the following events on the price level and output of the domestic economy (starting from the full employment level):
a. A rise in oil prices
b. An increase in government infrastructure spending
Q12. The assignment marks for 11 students are:
5, 8, 9, 10, 8, 3, 4, 7, 8, 6, 7
a. Calculate the mean, median and mode
b. Calculate the first quartile, third quartile, and inter quartile.
c. Calculate the sample standard deviation and interpret this value.
Q13. A sample of 4 married couples were asked on how happy each are in their own marriage. The rating by these couples are:
|
Husband (X)
|
Wife (Y)
|
|
6
|
5
|
|
7
|
6
|
|
8
|
7
|
|
3
|
2
|
a. Calculate the sample covariance and interpret the result.
b. Calculate the sample coefficient of correlation and interpret the result.
Q14. A simple linear regression model for salary (Yi) and the number of years of working (Xi) is as follows:
Yi = β0 + β1Xi + ei
where β0 and β1 are unknown parameters, and ei is the disturbance term.
The regression results are:
|
|
Coefficient
|
Standard error
|
t Stat
|
p-value
|
|
Intercept
|
A
|
20.00
|
5.00
|
0.005
|
|
Working years
|
B
|
0.50
|
10.00
|
0.002
|
Regression Statistics
R Square 0.8643
Standard error 9.4531
Observations 30
a. What are the values of A and B? Explain.
b. Explain the meaning of R Square.
c. What conclusions can you reach about the relationships between salary (Yi) and working years (Xi)?
d. What is the predicted salary for a person with 10 years working experience?
e. Is this prediction reliable?
Q15. A simple linear regression model for marks (Yi) and the hours of study (Xi) is as follows:
Yi = β0 + β1Xi + ei
where β0 and β1 are unknown parameters, and ei is the disturbance term.
The regression results are:
|
|
Coefficient
|
Standard error
|
t Stat
|
p-value
|
|
Intercept
|
50
|
2.00
|
B
|
0.006
|
|
Study hours
|
A
|
0.50
|
4
|
0.008
|
Regression Statistics
R Square 0.8643
Standard error 9.4531
Observations 30
a. What are the values of A and B? Explain.
b. Explain the meaning of R Square.
c. What conclusions can you reach about the relationships between marks (Yi) and study hours (Xi)?
d. What is the predicted marks for a person with 20 hours of study?
e. Is this prediction reliable?
Attachment:- Economics Questions.rar