1. Consumer consuming two commodities X and Y has the utility function U(X, Y) = 2XY+X. The prices of the two commodities are 8 birr and 4 birr respectively. The consumer has a total income of 80 birr to be spent on the two goods. PxX+PyY=M
A) Find the utility maximizing quantities of good X and Y.
B) Find the MRS at equilibrium. Mux/Muy-Px/Py
2. Suppose that the short-run production function of certain cut-flower firm is given by: Q = 8KL -0.5K² -0.21² where Q is quantity of cut-flower produced, L is labour input and K is fixed capital input (K=10). A) Determine the average product of labour (APL) function.
B) At what level of labour does the total output of cut-flower reach the maximum?
C) What will be the maximum achievable amount of cut-flower production?
3. Suppose the short run cost function of a firm is given by: TC=4Q³-6Q² + 4Q +10.
A) Find the expression of TFC & TVC B) Derive the expressions of AFC, AVC, AC and MC
C) Find the levels of output that minimize MC and AVC and then find the minimum values of MC and AVC​