Economics answers

Economics answers

Economics

Name

Affiliation

Course

Date Question 1a:

Question 1b:

The oppourtunity cost for 100 more cars as indicated in the above graph is 2 houses

Question 1c:

The opportunity cost for producing the last 100 cars is from point B to Point A. which is 500 less 400 which later gives 100 last cars. The opportunity cost is therefore 8-0 which gives 8.

Question 1d:

This is not possible as the marginal cost for the production of 150 cars does not have less houses, hence the relativity of 10 houses is not possible.

Question 2a: Positive

2b: Positive

2c: Positive

2d: Positive

Question 3a:

This demand curve indicates that while the prices of products and services increased the demand reduced.

Question 3b

The demand curve indicates that when the price of products and service increases there is a decrease in the Quantity demanded by the customers.

Question 5 i:

P = 25 -0.5Q

P-25 = -0.5Q

0.5Q=25-P

Q = 12.5 -0.5P

However, P = 2

Thus, ∆Q/∆P = -0.5

Quantity Demanded at P=2

(2, 11.5)

Ed= -0.5(2/11.5) = -0.08696

Therefore there exist perfect elasticity in Demand

Question 5ii:

2Q = 10-2P

Q = 5-P

However, P=2

Thus, ∆Q/∆P = -1

Quantity Demanded at P=2

(2, 3)

Ed= -1(2/3) = -0.666667

There it shows inelastic Demand

Question 5 iii:

Qab= 21 – 1/4 (Pa + 1/5 Pb)

Where Pa=10 Pb=20 find Eab

However, Pa=10 Pb=20

Thus, ∆Q/∆P = -1/4

Quantity Demanded at Pa=10 and Pb= 20

(14, 17.5)

Eab= -0.25(14/17.5) = -0.2

This is inelastic demand

Reference

Akerlof, G. A., & Kranton, R. (2010). Identity economics. The Economists’ Voice, 7(2).