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Introduction to Assignment(1)

This document outlines a group assignment for students in the Department of Economics at Hawassa University, focusing on various economic concepts and calculations. It includes tasks related to supply and demand, elasticity, revenue functions, production functions, and market structures. Students are instructed to work independently and submit their assignments by the final exam date, with penalties for similarity and late submissions.

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32 views

Introduction to Assignment(1)

This document outlines a group assignment for students in the Department of Economics at Hawassa University, focusing on various economic concepts and calculations. It includes tasks related to supply and demand, elasticity, revenue functions, production functions, and market structures. Students are instructed to work independently and submit their assignments by the final exam date, with penalties for similarity and late submissions.

Uploaded by

akafacta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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HAWASSA UNIVERSITY

DEPARTMENT OF ECONOMICS
Group assignment
Introduction to Economics
A. Year: 2017 E.C.

Maximum marks: 25pts.


General instructions
 Form a group that contains maximum of 10 students.
 Students are entrusted to do all questions on their own in an ethical manner without
copying from each other
 Complete similarity of one group’s assignment with another one entails zero mark on this
specific assessment.
 Submission later than final exam will not be considered.
1. Given weekly individual supply and individual demand for product that company “A”
produces as Qs=2+2P and Qd=10-2P respectively. If there are 50 identical companies and 250
identical buyers in the market, calculate

a) Market equilibrium price and quantity for the good


b) How much surplus or shortage would there be in the market if price is fixed at 12?
c) The price elasticity demand at equilibrium and interpret it.
2. What are the other determinants of supply other than own price the commodity? Illustrate the
magnitude of their effect on supply.

3. If A firm faces anon - linear demand function P = (650 - q) 1.5


- Determine the Total revenue (TR) and marginal revenue (MR) function of this firm.
5. If demand function for Hawassa industrial park’s leather product is given as Q = P 2 - 6P + 36,
where Q is quantity and P is price of a product,

 Find price elasticity demand function of the industry


 What is the value of the price elasticity demand if the industry charges 4$ per each unit of
product? Is demand elastic or inelastic? Interpret

1
 From the relationship between MR and elasticity demand, when the firm charges 4$ per each
product, what is happening to MR and TR of the industry

7. Suppose a firm faces a demand curve Q=5P-2 and its cost function is TC=Q. Find optimal level
of output (Q), price (P) and profit.
0.5
8. If the production function for a product of a company is given by Q = 20K L 0.5 where K is
capital and L is labor, Find the marginal Product of labor and marginal product of capital.
0.4 0.4
9. Suppose Shashemene tractor factory faces the production function Q=f(L, K)= 12K L
where K and L are employment of labor and capital. Assume wage rate for labor is 5$ and
rental payment for capital is 40$ and it has a budget of 800 $. Determine how much amounts
of capital (K) and labor (L) the factory should employ to maximize production. Determine the
maximum tractor production level. (Hint: the budget constraint equation is given by
5L+40K=800. Then solve for the problem using optimization with substitution method)

10. Explain the key difference between the four types of market structure; perfectly competitive,
pure monopoly, monopolistically competitive and oligopoly market structure.

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