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Group Assignment For The Course Introduction To Economics May 9

This document provides instructions for a group assignment in Introduction to Economics (Econ 1011) at Addis Ababa University. It includes a multiple choice section with 12 questions to be completed individually and a workout section with 10 problems to be completed as a group. Students are asked to provide their name, ID number, department, and section/group. The multiple choice questions cover topics like inputs vs outputs, short-run production characteristics, and costs. The workout problems involve calculating values like marginal cost, average cost, elasticity, and optimal output from given demand and cost functions.

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yohannes lemi
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© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
190 views

Group Assignment For The Course Introduction To Economics May 9

This document provides instructions for a group assignment in Introduction to Economics (Econ 1011) at Addis Ababa University. It includes a multiple choice section with 12 questions to be completed individually and a workout section with 10 problems to be completed as a group. Students are asked to provide their name, ID number, department, and section/group. The multiple choice questions cover topics like inputs vs outputs, short-run production characteristics, and costs. The workout problems involve calculating values like marginal cost, average cost, elasticity, and optimal output from given demand and cost functions.

Uploaded by

yohannes lemi
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Addis Ababa University May 9, 2021

College of Business & Economics Total mark: 25%


Introduction to Economics (Econ 1011)
Group Assignment
Semester I, 2020/21 Academic Year
The name of Instructor: Urgaia R. (PhD)
Name________________________________
ID Number____________________________
Department___________________________
Section/Group_________________________

INSTRUCTIONS:
 BE AWARE THAT MULTIPLE CHOICES PART IS AN INDIVIDUAL ASSIGNMENT
AND WORK OUT PART IS A GROUP ASSIGNMENT.

I. Multiple Choices: Choose the best from the given alternative answers and write your answer
only on the space provided on page 3, ( point mark each).

1. How can you differentiate inputs from outputs?

A. Inputs are goods or services that go into the process of production.


B. Outputs are factors of production used to produce goods or services
C. Labor, land, capital & entrepreneurship are outputs.
D. Inputs are any goods or services that come out of production process.

2. Which of the following is not correct?


A. Fixed inputs are constant in the short-run
B. Variable inputs cannot vary in the short-run
C. Variable inputs whose supply is elastic in short-run
D. Variable inputs that change with the change in outputs.
E. In the long-run all inputs are variable.

3. The law of production under the short-run condition is called


A. the law of variable proportions
B. the law of returns to a variable input
C. The law of diminishing marginal returns
D. All of the above
E. None of the above

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4. Which one of the following statements is not correct about short-run production?
A. Initially, total production rises at an increasing rate up to certain extent
B. In the 2nd phase, total production rises but at a decreasing rate
C. Marginal product initially rises showing decreasing returns
D. When marginal product of the variable input is increasing, total production is also
increasing at increasing rate
E. When marginal product of the variable input is decreasing until it reaches zero, total
production is rising but at a decreasing rate

5. The relationship between marginal product and average product of labor in the short-run can be
exhibited, except
A. If marginal product greater than product and average, product and average is increasing
B. If marginal product equals product and average, product and average is either at a
maximum
C. If marginal product less than product and average, product and average is decreasing
D. All of the above
E. None of the above

6. One of the following is not the three stages of short-run production characteristics

A. Marginal product of the variable input is higher than its average product implies
Increasing Returns
B. Marginal product of the variable input is falls below its average product implies
Decreasing Returns
C. Stages I & II are customarily known as economic regions in production process
D. Only stage II is economically feasible because both APL & MPL positive
E. Firms will be maximizing profits only if they are operating in Stage II

7. The law of diminishing marginal returns always apply in the short-run is valid, except
A. Technological progress is constant
B. Technological progress is varied
C. All other inputs are fixed
D. Variable factors must increase continuously up to a certain limit
E. Input prices are given

8. What is the difference between explicit and implicit costs?


A. Explicit cost for purchased inputs whether they are fixed or variable
B. Implicit costs are entrepreneurial costs
C. Implicit costs are opportunity cost of using an input in production of a commodity
D. All are true
E. Only B and C

9. In production costs of the short run, one of the following is not correct statements?
A. Total cost is the sum of the cost of all inputs used to produce a commodity
B. Variable cost is a cost of all inputs that change with output changes

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C. The total cost per unit of output continually decline as output increases
D. The fixed cost per unit of output continually decline as output increases
E. All of the above

10. The law of production under the short-run condition is called


A. the law of variable proportions
B. the law of returns to a variable input
C. The law of diminishing marginal returns
D. All of the above
E. None of the above
11. One of the following is not the three stages of short-run production characteristics.
A. Marginal product of the variable input is higher than its average product implies
Increasing Returns
B. Marginal product of the variable input is falls below its average product implies
Decreasing Returns
C. Stages I & II are customarily known as economic regions in production process
D. Only stage II is economically feasible because both APL & MPL positive
E. Firms will be maximizing profits only if they are operating in Stage II
12. What is not included in GDP, except?
A. Intermediate goods that have been turned into final goods and services
B. Used goods and Transfer payments
C. Non-market activities and Illegal goods
D. Final goods and services
E. All are answers
Space provided for your multiple choices.
1. 2. 3. 4. 5. 6.
7. 8. 9. 10. 11. 12.

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II. Workout: Clearly show the necessary steps (1 point mark each).

Referring to the following table below, answer to 1 to 2 and the total fixed cost is 30.

Output 0 1 2 3 4 5
Total Variable 0 3 41 49 58 70
Cost

1. What is the 5th level of marginal cost and average fixed cost, respectively?
2. Find the average total costs in the 4th and 5th level, respectively
Answer to 3–5, by referring the demand and marginal cost functions of a firm is given by
Q(P) = P-0.8 and marginal cost , MC(Q) = 10 1/4Q, respectively.
3. What is the point price elasticity of demand?
4. Calculate marginal revenue.
5. What is the optimal level of output that maximizes profit?
Answer to 6–9, by referring the demand and marginal cost functions of a firm is given by
Q(P) = P– 0.4 and marginal cost , MC(Q) = 10 – Q, respectively.
6. What is the point price elasticity of demand?
7. Calculate marginal revenue.
8. What is the optimal level of output that maximizes profit?
9. Given that a manufacturer’s cost function is C(Q) = 00 +20Q +Q (1 +Q)1/2 , then what is the
marginal cost at the quantity produced Q =3?
10. Using the following demand schedule of goods X and Y, answer the following questions,

point
A 2 3 13 18
B 3 5 9 12
C 5 6 4 10

a. What is the cross elasticity of demand for commodity X as you move from point A to B?
b. What do you think about the type of commodities given in question number a?
12. Given the following demand function for a good = 20 0 , and if the price of the good is
Birr 10.
Find:
a. the price elasticity of demand in the absolute value.
b. marginal revenue and average revenue.
c. What is the nature of the quantity demanded?

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