Q1.

Consider a price-taking firm that produces output using one input accordingto the production function given byf(x)=4X^0.5If the price of the output is $80 per unit and the cost of the input is $40 per unit, how much profit will the firm make if it maximises profits?

$625

$323

$318

$1,284

$640

Q2.

The market demand function for papayas is D(p)=250-5p. The elasticity at p = $5 is equal to:

-1

-0.125

-1.25

0.5

-0.25

Q3.

The inverse demand function for cases of whiskey isP_D(q) = 160 - 6qand the inverse supply function isP_s(q) = 60 + 2q. Originally there was no tax on whiskey. Then the government began to tax suppliers of whiskey $27 for every case they sold. How much did the price paid by consumers rise when the new equilibrium was reached?

It rose by $22.25.

It rose by $29.

It rose by $18.

It rose by $16.

None of the above.