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Economics Assignment II

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mohammedsemahl519
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9 views

Economics Assignment II

Assignment

Uploaded by

mohammedsemahl519
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Addis Ababa University

College of Business and Economics


Department of Economics
Target groups: Freshman Students
Type of Assignment: Group (Maximum of 8), Total Weight: 10%

Instructor: Teshome H.
General Directions:

 Attempt all writing questions, but choose only two from workout for submission.
 Should be short and precise
 Copying from each other is totally forbidden and will result in zero value
 Final Submission date: One week before the final exam schedule
Group Assignment
Part I: Discussion questions (Submit all)
1) Compare and contrast the following concepts.
a) Scarcity, choice and opportunity cost
b) Cardinal and Ordinal utility Theory
c) What is Budget line? Drive the slope of BL? What factor shifts BL? Discuss Thoroughly!
d) Explicit cost and implicit cost
e) Fixed inputs and variable inputs?
f) What is Market? What are the basic differences between the four market structures?

2) What is the difference between GDP and GNP? Why GDP measurement of national
economy often exposed to criticism?
3) What is unemployment? How can we measure it?
4) What is inflation? What are its causes? What is its impact on the economy?
5) Current the Ethiopia's economy experienced a rising unemployment, inflation, trade deficit,
and budget deficit; especially worsen after the outbreak of Corona virus disease (COVID-19)
and civil war. So what measures should be taken by the government to overcome such
macroeconomic problems (rising unemployment, inflation, trade deficit, and budget deficit)
using fiscal and monetary policy instruments as well as your personal opinion?

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Part II: Workout (Choose at least two questions for Submission)
1) A consumer consuming two commodities X and Y has the utility function U (X,Y ) = 2XY + 4X .
The prices of the two commodities are 8 birr and 4 birr respectively. The consumer has a total income
of 120 birr to be spent on the two goods.

A. Write equation of budget line


B. Find the utility maximizing quantities of good X and Y.
C. Find the MRSX,Y at equilibrium.
D. Show equilibrium point graphically.
2) Given the following production function Q = 2L2K- 0.6K2 - 200L with initial capital 10, then
a) What is the amount of labor that maximizes total output?
b) What is the maximum output?
c) Show the output maximizing condition graphically
3) Suppose the short – run cost function of a firm is given by
TC = 125 – 6Q + 5Q2
a) Determine the ATC, AFC, AVC and MC functions
b) Find the level of output that minimizes the ATC and the minimum ATC
4) Suppose that the total cost (TC), the total revenue (TR) and the marginal cost (MC) function
of a perfectly competitive firm are given below:

TC = Q3 – 2Q2 + 5Q + 10

TR = 9Q Then,

a) Calculate the profit maximizing level of output.


b) Determine the maximum profit or the minimum loss whichever is the case.
c) Calculate the AVC and AFC at the profit maximizing level of output.
d) Calculate the level of output that corresponds to the shout down point.
5) Consider the following information for a particular economy.
Total population = 60 million Total labor force = 40 million
Number of employed = 30 million
Natural rate of unemployment = 12%
a) Find the total unemployment rate
b) Calculate the cyclical unemployment rate

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6) Given the following data for a two good economy:
Base Year (2019) 2020
Good P Q P Q
Apples 1.50 100 1.60 120
Bread 1.00 200 1.25 225
A) Calculate Nominal GDP (NGDP) and Real GDP (RGDP) 2019 and 2020
B) Calculate the rate of real Economic Growth between 2019 & 2020
C) Calculate the value of the Consumer Price Index (CPI) for the 2019 and 2020
D) Calculate the annual rate of inflation between 2019 & 2000.

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