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Depreciation: This signifies the loss of value from an existing stock of real capital (for an individual company or for whole economy), reflecting normal wear-and-tear of machinery, equipment, and infrastructure. A country or company should invest continuously just to offset depreciation, or else its capital stock shall gradually run down.
Domestic Policy Failures: i) There is too much emphasis on "ownership" ownership of bad policies can lead to disasters. So, at times, the Fund and the Bank will need to be "p
The most fundamental economic problem is scarcity.
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Determine Optimal Price, Quantity and Economic Profit A firm has a demand function P = 200 – 5Q and cost function: AC=MC=10 and a potential entrant has a cost function: AC=MC
compare traditional modern and engineering cost curves
Principle Agent Problem [Dealing with hidden action] Assume that the employer (principle) wants its employee (agent) to work hard [You can safely assume that this maximizes th
Explain why goods provided by natural monopolies are often publicly owned. It would seem that most normal monopolies come with high MSB and also that society has deemed these g
Suppose the demand curve for a consumer for coffee is: Q = 6 – 2P, where Q represents the number of cups per day and P is the price of coffee per cup. Question: Suppose the
a) Joan's utility function can roughly be estimated as : U = 60Q 1 3/4 Q 2 2/3 She chooses from two composite commodities Q 1 and Q 2 whose prices per unit are kshs 20
Difficulties in Measuring Cost 1) Output data may represent an aggregate of different type of products. 2) Cost data may not include opportunity cost. 3) Allocating c
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