Assignment Task:
Differences between Accounting Profit Economics Assignment Help

Question 1 
(a) Explain the differences between accounting profit, economic prat and normal profit (3 marks). (b) Suppose that due to changing tastes there is a sudden increase in demand for emu 

(i) Assuming the costs of emu meat production remain unchanged, what would you expect to happen to profits in the emu meat industry? 

(ii) Assuming that there are low barriers to entry into the emu meat industry, explain why resources would move bto this industry? 

(iii)In the big run, what would you expect to happen to prats in this industry? (1 ma.). (iv) Will normal profits occur in this industry in the big run? If so, explain why? 

Question 2
(a)Critically analyze and explain the following statement 'Goods and service. are scarce because resources are scarce'.  

(b) During a five year period, the (icfcet sa. of a city's professional football team have increased. by 30 percent at the same time that average ticket prices have risen by 50 percent. Do these changes imply an upward sloping demand curve? Espial. 

Question 3 Explain and illustrate graphically the effect of: (i) An increase in income on the demand of an inferior good. (ii) A drop in the price of product L, on the demand for a substitute product M. (iii) A decline in income upon the demand of a normal good. (iv) An increase in the price of product J upon the demand for complementary good K. 

Question 4 
Consider a hypothetical market for gold. On a diagram show a market demand curve D, and a market supply curve S, . Show on your diagram the market equilibrium price P., and the quantity of gold produced 0„,  Unfortunately, gold mining pollutes the environment The costs associated with polution is borne by the whole comma 
(i) With reference to the diagram you have drawn, does the mance supply curve S, incorporate all the costs of production of mining gold? Explain.

(II) Now suppose that the government Wishes to internalize the polution costs associated with gold mining by imposing a constant per-ounce tax on all firms in the industry. Show the impact of such an on your diagram. What did Will happen to the equilibrium price and quantity? 

(iii) What is the incidence of this taxon suppliers and buyers and on other parties who do buy or sell gold? Use your diagram to ilustrate your answer. 

 


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  • Posted on : January 09th, 2019
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