- In the world of electronics overtime people realized the immense use of having a personal laptop. And at the same time the technology has improved significantly in last decade. In fact the technological improvement has surpassed the increase in willingness and ability to purchase a laptop. Given this piece of information, what in your opinion happened to the equilibrium price and quantity in market for personal laptop. Draw a diagram and explain your answer.
- If income elasticity of demand of good X is 0.89, what will happen to equilibrium price if there is an increase in income of consumers. Draw a diagram to support your answer.
- If Ministry of labor sets up a minimum wage in the labor market, what can be the potential effect on the employment? Explain your answer with help of relevant diagram.
- A manager in a firm has been assigned a job to find costs at different levels of output He is provided with the following table and asked to fill up the missing values since there was no information available.
| Output | Total cost | Fixed cost | Variable cost | Average variable cost | Average total cost |
| 1 | 2000 | 500 | |||
| 2 | 2500 | ||||
| 3 | 2800 | ||||
| 4 | 3300 | ||||
| 5 | 4000 | ||||
| 6 | 4800 | ||||
| 7 | 6000 |
He was also asked to find the marginal cost at output level of 5 units.
- According to posting from last fall, sales for products such as Spam, pancake mixes, instant potatoes, rice and beans have been booming during the recession; a spokesperson from a grocery chain is quoted as saying “They’re real belly fillers.” Comment on this, using concept related to any one of the elasticities discussed in class.
If RTA increases the bus-fare from Abu Dhabi to Dubai, then what will happen to their revenue?
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