Economics homework help

Economics homework help.  
Question 1:                                                                                                     [1×5=5 marks]
 

• Consider the following statement to fill in the table below:

Below are different levels of output of a magazine. The producer of the magazine intends to price each copy for sale at $6 each. The cost of materials and wages per magazine is $4. Use a calculator to complete the table with costs, revenues and profits.

 
 
Question 2: Solve the following problems                                                           [20 marks]
 

1. A person managing a dry-cleaning store for OMR 25,000 per year decides to open a dry-cleaning store. The revenues of the store during the first year of operation are OMR 100,000 and the expenses are OMR 35,000 for salaries, OMR 10,000 for supplies, OMR 8,000 for rent, OMR 2,000 for utilities, and OMR 5,000 for interest on bank loan.

*Calculate:
(a) The accounting profit, (1mark)
(b) The economic profit (2mark)
 
 
 

2. Ahmed owns and operates a small business that provides economic consulting services. During the year he spends OMR 55,000 on travel to clients and other expenses, and the computer that he owns depreciates by OMR 2,000. If he didn’t use the computer, he could sell it and earn yearly interest of OMR 100 on the money created through this sale. Mr. Ahmed’s total revenue for the year is OMR 100,000. Instead of working as a consultant for the year, he could teach economics at a small local college and make a salary of OMR 50,000.
   1. What is Ahmed’s accounting profit? (1marks)
   2. What is Ahmed’s economic profit? (2marks)

3. You are trying to decide whether to go to India on vacation or stay home and work. If you work, you will earn OMR 12 per hour for the 42 hour work week. If you go away, you will incur the following costs.
   • Airline ticket OMR 650
   • Hotel OMR 800
   • Food OMR 400
   • Incidentals OMR 175
     1. What is the opportunity cost of going on the trip?(1 mark)
     2. What is the explicit cost of going on the trip? (1 mark)
     3. What is the economic cost of going on the trip? (2 mark)

4. The costs of attending school of economics for one year are OMR4, 250 for tuition, OMR 1400 for Reference books, OMR 950 for the Hostel room, and OMR 1200 for meals. As another opportunity the student could earn OMR15, 000 by getting a job instead of going to university and, in addition, earn 5% interest by saving the money not spent on attending university.

Calculate (a) Explicit costs (1mark)        (b) Implicit costs (1marks)
 
 

5. Calculate price elasticity of demand (PED) when the price of radios decreases 5%, quantity demanded increases 5%. Comment on the result.(2marks)

6. Suppose the price of an item increases from OMR 20 to OMR 23. As a consequence, the demand of another good increases by 30%. Calculate the cross-price elasticity for the other good. Is the other good a substitute good or a complementary good to the first one?(3marks)

7. When Mr. Ahmed’s income was OMR. 400, he bought 25 liters of milk per month; when his income increased to OMR. 500, he purchased 35 liters of milk per month. What was Mr. Ahmed’s income elasticity of demand for milk? (3marks)

 
 
 
 
Question 3: Long Theory Questions       [5 marks]
 

• With the help of appropriate examples, explain the term production function.

Economics homework help