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Econ Assignment

The document outlines a series of economic questions and problems related to production functions, cost functions, unemployment rates, and GDP calculations. It includes specific tasks such as explaining the law of variable proportions, analyzing short-run production functions, and calculating economic indicators like unemployment rates and GDP. Each question requires detailed steps and calculations to arrive at the answers.

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0 views1 page

Econ Assignment

The document outlines a series of economic questions and problems related to production functions, cost functions, unemployment rates, and GDP calculations. It includes specific tasks such as explaining the law of variable proportions, analyzing short-run production functions, and calculating economic indicators like unemployment rates and GDP. Each question requires detailed steps and calculations to arrive at the answers.

Uploaded by

drain.prt
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Answer all questions clearly and completely and Show all necessary steps and calculations

for numerical problems.

1. Explain the law of variable proportions.


2. Can accounting cost be greater economic cost? Explain.
3. Suppose the production function is given by Q(L,K) = L 4 K 4 . Assuming capital is

fixed, find APL and MP L.


4. Consider the following short run production function:
Q  6L2  0.4L3
a) Find the value of L that maximizes output
b) Find the value of L that maximizes marginal product
c) Find the value of L that maximizes average product
5. Given a short run cost function as T C  Q 3  2Q 2  60Q  100 , find the minimum value
of AVC and MC.
6. Consider the following information for a particular economy.
Total population = 60 million Number of employed = 30 million
Total labor force = 40 million Natural rate of unemployment = 12%

a) Find the total unemployment rate


b) Calculate the cyclical unemployment rate
7. Consider an economy that produces and consumes Bread and Automobile. Data for
two different years 2005 and 2010 is given in the following table.

Year 2005 2010


Price of Automobiles $ 5000 $ 6000
Price of a loaf of bread $10 $20
Number of automobiles produced 100 120
Number of loaves of bread produced 500,000 400,000

Using the year 2005 as a base year,

a) Calculate the nominal and real GDP of 2010.


b) Find the value of GDP Deflator for the year 2010 and
interpret.
c) Calculate the inflation rate in 2010.

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