Question 1. True/False Question: Are the given statements true or false? A simple yes-no answer will not suffice. To re- ceive points, you must explain your answer (with the use of diagrams or equations where necessary). a) Skyworth is a Smart TV producer. The firm's total variable cost is given by TVC(q) = 700g+q², where q is the quantity produced. Suppose the government introduces a new tax which requires Skyworth to pay a lump sum tax of 4,000. "If the tax is a quasi-fixed cost, then the firm's average variable cost remains unal- tered." b) Bob's preferences for ice-cream (good 1) and frozen yogurt (good 2) are given by the utility function u(1, 12) = r¡ + x2. Suppose Bob has $50 to spend and the unit price of both goods are $5. "An increase in Bob's income leads him to increase his frozen yogurt consumption."

Question 1. True/False Question: Are the given statements true or false? A simple yes-no answer will not suffice. To re- ceive points, you must explain your answer (with the use of diagrams or equations where necessary). a) Skyworth is a Smart TV producer. The firm's total variable cost is given by TVC(q) = 700g+q², where q is the quantity produced. Suppose the government introduces a new tax which requires Skyworth to pay a lump sum tax of 4,000. "If the tax is a quasi-fixed cost, then the firm's average variable cost remains unal- tered." b) Bob's preferences for ice-cream (good 1) and frozen yogurt (good 2) are given by the utility function u(1, 12) = r¡ + x2. Suppose Bob has $50 to spend and the unit price of both goods are $5. "An increase in Bob's income leads him to increase his frozen yogurt consumption."

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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