Economic Questions V

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You are welcome to ask questions on Economics. I am looking to explain economic principles / ideas/ recent developments in economics. Due to the volume of questions, I can no longer promise to answer. But, I will try if it meets below criteria.

I will post the answer on this blog, for everyone to benefit from. I never email individual answers

Please Bear In Mind

  1. Use google custom search (top right) to see if question has been asked. If I have already answered a question I don’t tend to repeat it.
  2. The replies will be guidance and not for duplication. Your essays should be your own work.
  3. Don’t ask me to do your coursework / assignment e.t.c. The answer will be published here where your teacher can see it.
  4. My speciality is economics for British A Level standard.
  5. I don’t answer university questions or maths calculations
  6. I am looking to explain economic principles / ideas/ recent developments in economics.
  7. I will answer as a new post. Check home page of blog for new post. With question and answers

I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.

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467 thoughts on “Economic Questions V”

  4. 1. Using examples from the hotel sector briefly explain what is meant by the concepts of competitive advantage and competitive scope.

    2. Using appropropriate diagram explain how and why the output, price, profit, revenue and costs are likely to vary between a large hotel chain with a large number of shareholders and a chain controlled by a close knit family group.

    3. using appropriate diagrams explain why the amount of monopoly profit generated by a specialist cuisine restaurant will tend to be higher than that for a standard beefeater style restaurant.

    4. explain why it makes economice sense for a restaurant to offer a wider range of services including business lunches, evening meals and take away meals rather than just concentrating on their core evening business.

    5. Explain what is meant by the concept of the ‘minimum efficient scale of production (MES) and consider how the JD wetherspoons public house chain have affected the MES within thier industry.

  5. 6. Which of the following countries had the highest average annual per-capita real income growth rate from 1965 to 2004?
    a. Brazil
    b. China
    c. Japan
    d. United Kingdom
    e. United States

  6. Please help me in solving following problems.

    1. Suppose that there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. Present production is:
    Iowa Nebraska
    Wheat 20 million bushels 120 million bushels
    Corn 120 million bushels 20 million bushels

    a. Explain how, with trade, Nebraska can wind up with 40 million bushels of wheat and 120 bushels of corn while Iowa can wind up with 40 million bushels of corn and 120 million bushels of wheat.

    b. . If the states ended up with the numbers given in a, how much would the trader get?

    2) The Ali Baba Co is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is Q= 112,000 – 500P + 5M, where Q= number of carpets, P= price of carpets (dollar per unit), and M= consumers income per capita. The estimated average variable cost function for Ali Baba’s carpets is AVC= 2000 – 0.012Q + 0.000002Q2

    Consumers income per capita is expected to be $20,000 and total fixed cost is $100,000
    1. How many carpets should the firm produce in order to maximize profit?
    2. What is the profit maximizing price of carpets?
    3. What is the maximum amount of profit that the firm can earn selling carpets?
    4. Answer parts a through c if consumer’s income per capita is expected to be $30,000 instead.

    3)Ever Kleen Pool Services provides weekly swimming pool maintenance in Atlanta. Dozens of firms provide this service. The service is standardized;each company cleans the pool and maintains the proper levels of chemicals in the water. The service is typically sold as a four month summer contract. The market price for the four month service contract is $115.
    Ever Kleen Pool Services has fixed costs of $3500. The manager if Ever Kleen has estimated the following marginal cost function for Ever Kleen, using data for the last two years:

    SMC=125 – 0.42Q +0.0021Q^2 (suppose to be exponent 2)

    Where SMC is measured in dollars and Q is the number of pools serviced each summer. Each of estimated coefficients is statistically significant at the 5 percent level.

    a.Given the estimated marginal cost function, what is the average variable cost function for EverKleen?

    b.At what output level does AVC reach its minimum value? What is the value of AVC at its minimum point?

    c.Should the manager of EverKleen continue to operate, or should the firm shut down? Explain.

    d.The manager of EverKleen finds two output levels that appear to be optimal. What are these levels of output and which one is actually optimal?

    e.How much profit (or loss) can the manager of EverKleen Pool Services expect to earn?

    f.Suppose EverKleen’s fixed costs rise to $4000. How does this affect the optimal level of output ? Explain

  7. I was looking for a few pointers to get me started on studying supplier induced demand. Anything advice you could offer would be great.

  9. It is believed that the insurance industry faired better than banks after the financila crisis, do you belive this is the case and is this still proving to be the case? Surely with the crisis demand for insurance has decreased dramatically with less disposable income available?

  11. Large organisations face no competition. there is therefore no choice. small competitive businesses are a better means of providing for consumers’ needs.

    Do you agree with this argument?

  13. Sketch a general cubic cost function, assuming it has a positive intercept. What does this intercept represent from an economic perspective? Does this curve represent a short run or long run cost function? What does the cubic shape reflect about the nature of a firm’s costs?

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