a) Fill in the blanks in the following table. At which level of output do we obtain maximum profit? What is the relationship between marginal revenue and marginal cost at the profit-maximizing level of output?

b) Suppose that you need to buy a refrigerator for your office. You recognize that there are two alternative models in the market that might meet your needs. If you buy model A, you have to pay AZN 1000 but with this model you will decrease your electricity bills by AZN 50 per year for the next 5 years. If you prefer model B, you have to pay AZN 800 but you don?t see any decrease in your electricity bills. If the interest rate is 5%, which model will you buy?

c) Explain the effect of minimum wage policy on labor market. What are the arguments for supporters and opponents of minimum wage policy?

d) Suppose the price elasticity of demand for Azercell cards is -2. If Azercell managers want to increase their profits, how should they change the price of Azercell cards? Explain in detail.

e) Suppose the income elasticity of demand for AZAL flight tickets is 1.75. If the average income level decreases by 6%, what would be the effect of this recession on the demand for AZAL flight tickets? Explain in detail.

Transcribed Image Text:

Level of Output 20 21 22 23 24 25 26 27 28 29 30 Total Revenue 2400 2800 3180 3540 3880 4200 4500 4780 5040 5280 5500 Total Cost 1900 Profit Marginal Revenue 420 Marginal Cost 100 120 140 160 180 200 220 240 260 280 300 Marginal Profit Level of Output 20 21 22 23 24 25 26 27 28 29 30 Total Revenue 2400 2800 3180 3540 3880 4200 4500 4780 5040 5280 5500 Total Cost 1900 Profit Marginal Revenue 420 Marginal Cost 100 120 140 160 180 200 220 240 260 280 300 Marginal Profit

Answer rating: 100% (QA)

a Level of Output Total Revenue Total Cost Profit Marginal Revenue Marginal Cost Marginal Profit 20 ... View the full answer