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Software engineering Assignment econ

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13 views

Software engineering Assignment econ

Uploaded by

eliasmesfin7825
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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DIRE DAWA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

INTRODUCTION TO ECONOMICS Individual Assignment (20%)

Explanation and workout

1. Why does the quantity of salt demanded tend to be unresponsive to changes in its price?
And Why is the quantity of education demanded in private universities much more
responsive than salt is to changes in price?
2. Suppose that the demand equation is indicated as Q D= 10Q-4P and the price is equal to
$10, then find the price elasticity of demand using point solving method?
3. What is the income elasticity of automobiles as per capital income increases from,
$10,000 to $11,000? The demand for automobiles as a function of income per capital is
given by the equation. Q= 50,000 +5(y).
4. A person has $ 100 to spend on two goods X and Y whose respective prices are $3 and
$5.
A. Draw the budget line.
B. What happens to the original budget line if the budget falls by 25%?
C. What happens to the original budget line if the price of X doubles?
D. What happens to the original budget line if the price of Y falls to $4?
5. Given utility function U= X 0.5+ Y 0.5where PX = 12 Birr, Birr, PY = 4 Birr and the income
of the consumer is, M= 240 Birr.
A. Find the utility maximizing combinations of X and Y.
B. Calculate marginal rate of substitution of X for Y (MRS X,Y) at equilibrium and
interpret your result.
6. A rational consumer spends all of her income on two goods: Apple and Banana. Suppose
the last dollar spent on Apple increased her total utility from 60 utils to 68 utils and the
last dollar spent on Banana increased her total utility from 25 utils to 29 utils. If the price
of a unit of Apple is 2 Birr, what is the price of a unit of Banana at equilibrium?

1
7. Consider the following short run production function: Q 6 L2−0.4 L3
A. Find the value of L that maximizes output
B. Find the value of L that maximizes marginal product
C. Find the value of L that maximizes average product
8. Show the relationship between short-run MC and MP L both mathematically and
graphically.
9. Consider a woman was working for certain private enterprise and earning Birr 10,000 per
month. Currently she started her own business with a capital of Birr 250,000, which was
from her own savings. She used her own house as an office, which was rented for Birr
2500. Assume interest on saving is 8%. At the end of the year, her sales were Birr
450,000 and her total costs were Birr 230,000.

Calculate:

a. Business profit of the individual

b. Implicit cost and economic profit

c. Is her decision of starting the new business a rational decision? Why or


why not?

10. Consider that ABC Corporation is a publisher of novels. The corporation hires an
economist to determine the demand for its product. After months of hard work the
QX
analyst tells the company that demand for the firm’s novels ( ), is given by the
following equation.

Q X =12000−5000 P X +5 I +500 P C

PX PC
Where; is the price charged for the novels, I is income per capital, and is the price of
books from competing publishers. Using this information, the company’s managers want to:

a. Determine price elasticity of demand for novel

b. Find income elasticity demand for novel

c. Examine cross price elasticity of books for novel

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