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economic comparative market, Assignments of Economics

NED University of Engineering and Technology Karachi (NEDUETK)Economics

Its a assignment on comptative maraket

Typology: Assignments

2020/2021

Uploaded on 06/06/2021

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Usman Institute of Technology
HW-3-B Spring 2021 Semester
Course Code: HS 252 Course Title: Economics Submission Date: 30/05/2021
Maximum Marks: 20 Max Time Allowed: 8 days
PLEASE FILL IN THE FOLLOWING BEFORE PROCEEDING
Seat No. Ct-19100 Roll No. 19b-018-cs
Batch: 19b Enrollment No. uit/366/2019
Important
This is an open-book examination conducted in line with the online academic policies developed by the
NED University of Engineering and Technology. All necessary information about the online examination
has been shared with students in advance.
Declaration
I guarantee that all submissions are based on my independent work without any unauthorized help. All
activities are completed with full adherence to the “Ethics Policy” of the Institute. I understand that any
breach would result in disciplinary action against me as per Institute rules.
☒ I have read and understood the Students Ethics Policy for Online Assessments.
(paper will not be graded if the above is not checked)
Note: Submission of this paper certifies that you are agreed to the Students Ethics Policy for Online
Assessments and are liable to be judged according to it.
1. The following table shows data for a simple production function.
Capital (K) Labor (L) Total Product (TP) Average Product (AP) Marginal Product
(MP)
10 0 0 — —
10 1 5
10 2 15
10 3 30
10 4 50
10 5 75
10 6 85
10 7 90
10 8 92
10 9 92
10 10 90
Page | 1 of HW-3-B-ECO
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Usman Institute of Technology

HW-3-B Spring 2021 Semester Course Code: HS 252 Course Title: Economics Submission Date: 30/05/ Maximum Marks: 20 Max Time Allowed: 8 days PLEASE FILL IN THE FOLLOWING BEFORE PROCEEDING Seat No. Ct-19100 Roll No. 19b-018-cs Batch : 19b Enrollment No. uit/366/

Important

This is an open-book examination conducted in line with the online academic policies developed by the NED University of Engineering and Technology. All necessary information about the online examination has been shared with students in advance.

Declaration

I guarantee that all submissions are based on my independent work without any unauthorized help. All activities are completed with full adherence to the “Ethics Policy” of the Institute. I understand that any breach would result in disciplinary action against me as per Institute rules. ☒ I have read and understood the Students Ethics Policy for Online Assessments. (paper will not be graded if the above is not checked) Note: Submission of this paper certifies that you are agreed to the Students Ethics Policy for Online Assessments and are liable to be judged according to it.

  1. The following table shows data for a simple production function. Capital (K) Labor (L) Total Product (TP) Average Product (AP) Marginal Product (MP) 10 0 0 — — 10 1 5 10 2 15 10 3 30 10 4 50 10 5 75 10 6 85 10 7 90 10 8 92 10 9 92 10 10 90

a) From the information in the table, calculate marginal and average products. b) Graph the three functions (put total product on one graph and marginal and average products on another). (Use MS Excel to Draw the Graph)

2 Jim is considering quitting his job and using his savings to start a small business. He expects that his costs will consist of a lease on the building, inventory, and wages for two workers, electricity, and insurance. a) Identify which costs are explicit and which are opportunity (implicit) costs. Implicit cost:insurance lease on the building Explicit:inventory wages electricity b) Identify which costs are fixed and which are variable. Fixed cost:insurance , wages lease on the bulding Variable cost: inventory electricity

3 Suppose Marcus is operating a bookstore, and he made zero economic profit last year. a) What was Marcus’s accounting profit likely to be? It will be positive and equal to implicit cost : b) If the implicit costs had increased, what would be the effect on Marcus’s economic and accounting profits? High implicit cost will give power to econimmic profit but for marcus’s accounting profit will not be any change

c) At what point is average total cost minimized? At what point is average variable cost minimized? ATC is minimized production is capital = 10 labor = 7

  1. Consider the shape of the production and cost functions for two different firms. a) For Firm 1, workers have constant marginal product. That is, each worker produces exactly the same amount as the previous worker. Use this information to graph the approximate shape of the firm’s short-run product and cost curves.
  1. Does an increase in rent lead to the same effect on a firm’s average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC) as an increase in wage rates does? Rise in rent will decrease AVC,AC MC because production rate will rise if firm’s rent increase will effect all costs
  1. Suppose that a firm’s only variable input is labor. When 50 workers are used, the average product of labor is 50, and the marginal product of the 50th^ worker is 75. The wage rate is $80, and the total cost of the fixed input is $500. a) What is average variable cost? Show your calculations. AVC = WL/Q AVC = ($80)(50)/ AVC = $1. THe average cost will be $1. b) What is marginal cost? Show your calculations. MC = change in cost/change in quantity MC = 80/ MC = 1. c) What is average total cost? Show your calculations. ATC = TC/Q = (VC+FC)/Q = (wL+ FC)/Q since w = 80,L=50, we have ATC=(8050+500)/Q = 4500/Q To find Q, we have that APL=Q/L and we know that APL = 50 .l=50 so 50 = Q/50 which means Q= so ATC =4500/2500 = 1. d) Is each of the following statements true or false? Explain your answer. I. Marginal cost is increasing. We don’t know the marginal product of next worker here I can’t say wheater it is increasing or decreasing ,but its true MC will rise if there is low productions II. Average variable cost is increasing. The average total cost must be decreasing because the marginal cost is less then the average cost .The marginal cost measures the cost of production one more additional unit is less then the average of making one unit then the average of making one unit is decreasing.. III. Average total cost is decreasing. ATC< MC it means that ATC is decreasing
  1. Suppose that a firm is producing at the quantity where the short-run average total cost (SATC) curve is upward sloping, and there are diseconomies of scale in the long run. What are the firm’s short-run and long-run decisions for minimizing its costs of production? Click or tap here to enter text.
  1. The following table shows the quantity and the long-run total cost of a firm. Quantity (thousands) 1 2 3 4 5 6 7 8 9 Long-run total cost (thousand $)

a) At what level(s) of quantity are there economies of scale? Explain your answer. The fi b) Discuss three factors that create economies of scale. The firm experiencing economics sacale from Q = 10 to Q= 5