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Economics Assignment for ECE

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25 views4 pages

Economics Assignment for ECE

Uploaded by

yohaneszewdu798
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 PDF, TXT or read online on Scribd
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Addis Ababa Science and Technology University

College of Social Science and Humanities


Department of Business and Management
==================================================================

Course Guide: Dr. Engida Sisay

Introduction to Economics, Assignment I, Individual


Submission Date: December 24, 2024
Maximum Value = 10%
Part I: Workout Questions

1. PPF

The figure above shows a nation’s production possibilities frontier for apples and oranges.
a) What combination of goods is represented by point A?
b) What combination of goods is represented by point B?
c) Which point represents an unattainable combination of goods?
2. Consider the production choices for two goods: books and movies.
Table 1 shows the production possibilities for the two goods.
Table 1:
Books Movies
A 0 600
B 200 500
C 400 300
D 600 0

(a). Draw the PPF for these two products.


(b). Give examples of combinations that are attainable and unattainable respectively.
(c). Give examples of combinations that are efficient and inefficient respectively.
(d). Gives examples that illustrates a tradeoff and a free lunch respectively.

3. Demand
(a). Draw the demand curve for one kind of mushroom from the following demand schedule.
What property does this demand curve have?

Price Quantity Demand


1 50
2 40
3 30
4 20
5 10

(b). Explain the effects on the demand for the mushroom of the following events that occur
one at a time:
i. It is reported by the government that eating this mushroom increases the probability of
cancer;
ii. The price of the mushroom rises;
iii. The price of another kind of mushroom increases;
iv. Consumers' income increase.
(c). Use a graph to illustrate the effect of each events that given in (b).
(d). Does any event (events) illustrate the law of demand?

4. Supply
(a). Draw the supply curve for an automobile from the following supply schedule. What
property does this supply curve have?

Price Quantity Supplied


1 10
2 20
3 30
4 40
5 50

(b). Explain the effects on the supply for the automobile of the following events that occur
one at a time:
i. An innovation succeeds in promoting the technology of producing this automobile;

ii. The price of the automobile falls;

iii. The government increases the tax rate for the automobile industry;

iv. The price of the automobile is expected to rise next year;

v. The wage of automobile workers rises.

(c). Use a graph to illustrate the effect of each event that given in (b).

(d). Does any event (events) illustrate the law of supply?


Addis Ababa Science and Technology University
College of Social Science and Humanities
Department of Business and Management
==================================================================

Course Guide: Dr. Engida Sisay

Introduction to Economics, Assignment II, in Group

Submission Date: December 24, 2024


Maximum Value = 10%

1. Assume that Bilen consumes products X and Y with marginal utility function MUX = 40-
5X and MUY = 30 – Y, respectively. Assume that the unit price of X is birr 5, the unit price of
Y is birr 1, and Bilen’s budget is birr 40. What is Bilen’s utility-maximizing combination of
product X and Y?

2. Suppose the utility function from consuming two products of X and Y is given by U = XY.
Assume the unit price of X and Y are respectively PX = 2, PY = 4, and the budget is 120.
(a). Calculate the quantity consumed of X and Y with utility maximization.
(b). Calculate the maximum utility level.

3. A person has birr 200 to spend on two goods X and Y whose respective prices are birr 6
and birr 10, respectively.
A. Draw the budget line.
B. What happens to the original budget line if the budget falls by 50 %?
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 birr 6?
4. Given utility function U(X, Y) = X1/3 Y2/3 where PX = 6 Birr, Birr, PY = 3 Birr and the
income of the consumer is, M= 36 Birr.
A. Write the equation of the budget line and determine its slope?
B. Find the utility-maximizing combinations of X and Y.
C. Calculate the marginal rate of substitution of X for Y (MRSX, Y) at equilibrium and interpret
your result.

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