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Assignment 1

AEE problems

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23 views2 pages

Assignment 1

AEE problems

Uploaded by

SHAHFAISAL HAMEED
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Applied Economics for Engineers (AEE), NED

Assignment 2 Date:19-05-2024

Q1. Discuss the shape of the demand curve and supply curve in the light of “Law of Demand”
and “Law of Supply” respectively.
(2)
Q2. Draw and discuss the following conditions for the data given below.
(a) Draw a graph of the potato chip market and mark in the equilibrium price and quantity.
(1)
(b) If the price is 60¢ a bag, is there a shortage or a surplus, and how does the price adjust?
(2)
The demand and supply schedules for potato chips are:

Price Quantity Demanded Quantity Supplied


(Cents per bag) (Millions of Bags per week) (Millions of Bags per week)
50 160 130
60 150 140
70 140 150
80 130 160
90 120 170
100 110 180

Q3. Discuss the conditions if the price of a cell phone falls?


(a) the quantity of cell phones supplied and
(b) the supply of cell phones
Q4. Discuss the effect on the equilibrium price and quantity of MP3 players (such as the iPod) if)
(a) The price of an MP3 download rises? (Draw the diagrams)
(b) Electronics workers’ wages rise? (Draw the diagrams)
(c) Both the events occur together? (Draw the diagrams)

PRODUCTION

Q7. The table sets out Sue’s Surfboards’ total product schedule.

Labour (workers per week) Output (surfboards per week)


1 30
2 70
3 120
4 160
5 190
6 210
7 220

(a) Draw the total product curve.


(b) Calculate the average product of labor and draw the average product curve.
(c) Calculate the marginal product of labor and draw the marginal product curve.
(d) Over what output range does the firm experience diminishing marginal product of labor?
(e) Over what output range does the firm experience an increasing average product of labor but
a diminishing marginal product of labor?
Q8. Terri runs a rose farm. One worker produces 1,000 roses a week; hiring a second worker
doubles her total product; hiring a third worker doubles her output again; hiring a fourth
worker increased her total product but by only 1,000 roses. Construct Terri’s marginal product
and average product schedules. Over what range of workers do marginal product increase?
Q9. Starbucks is raising its prices because the wholesale price of milk has risen 70 percent and
there’s a lot of milk in Starbucks lattes. Source: USA Today, July 24, 2007
Is milk a fixed factor of production or a variable factor of production?

COST

Q10. Alpha Associates has the following details:


Fixed cost = Rs. 20,00,000, Variable cost per unit = Rs. 100, Selling price per unit = Rs. 200 Find
(a) The break-even sales quantity,
(b) The break-even sale
Q11. Consider the following data of a company for the year 1998:
Sales = Rs. 80,000, Fixed cost = Rs. 15,000, Variable cost = 35,000, Find profit of the company.
Q11. An engineering consulting firm measures its output in a standard service hour unit, which
is a function of the personnel grade levels in the professional staff.
The variable cost (cv) is $62 per standard service hour.
The charge-out rate [i.e., selling price (p)] is $85.56 per hour.
The maximum output of the firm is 160,000 hours per year,
and its fixed cost (CF) is $2,024,000 per year.
For this firm,
(a) what is the breakeven point (quantity) in standard service hours?
(b) what is the percentage reduction in the breakeven point (sensitivity) if fixed costs are
reduced 10%; if variable cost per hour is reduced 10%; and if the selling price per unit is
increased by 10%?

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