JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ECONOMICS
Economics group assignment (20%)
Due date for Submission: February 20-2024
Please note the following instructions for the assignment:
 The assignment should be done by a group consisting of a maximum of ten members.
 Each group member should actively participate in attempting each question.
 It is important to avoid copying from other groups or individuals, as this will result in the
cancellation of your result.
 The assignment must be submitted on or before the due date. Late submissions will not be
accepted and will lead to the cancellation of your result.
 Your work should be presented in a neat and clear manner, as neatness is important and
valued.
 When solving problems, make sure to show all necessary steps clearly and neatly.
 The maximum number of pages for this assignment is 15, excluding the cover page.
1. Discuss and critically evaluate different definitions of economics provided by prominent
economists. Analyze the strengths and limitations of each definition in capturing the
essence of the subject (2 pts.).
2. Discuss the concept of market equilibrium and the role of supply and demand in
determining equilibrium price and quantity by using relevant graph. Analyze the
conditions necessary for market equilibrium to be achieved in a market in Ethiopia. In
addition to this, analyze the impact of government policies, such as price controls and
subsidies, on the equilibrium price and quantity in the Ethiopian market. Discuss the
advantages and disadvantages of such interventions (3 pts.).
3. Evaluate the role of monetary policy in managing inflation and promoting economic
growth in Ethiopia. How has the central bank's control over interest rates and money
supply influenced price stability and investment decisions in the country? Similarly,
explain the concept of fiscal policy and its role in stabilizing the economy. Discuss the
advantages and disadvantages of expansionary fiscal policy versus contractionary fiscal
policy (3 pts.)
Economics Assignment, January 2024(20%)
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4. Sara likes playing Pool (P) and watching Cinema (C). The cost of a Pool is 2 Birr and that of
Cinema is 4 Birr. Sara’s income allotted for this is birr 100 and her utility function is U (P, C)
= P2C2. Then calculate:
A) Find Sara’s utility maximizing levels of pool played and cinema watched. Find also her
utility level from consuming that utility maximizing levels of pool and cinema (2 Pts.).
B) Suppose that the price of cinema increases to 5 Birr then, find Sara’s utility maximizing
levels of pool played and cinema watched with this new price of cinema (1 pt.).
C) Find the income necessary to make Sara reach the same utility level as before the price
change (2 pts.).
5. Assume that, for a perfectly competitive industry that has 100 identical firms, the market
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demand supply functions are 𝐷 = 10,000 − 10𝑃 and 𝑆 = (10𝑃 − 2,000) respectively.
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A) Determine the equilibrium price and quantity for the industry (1 pt.).
B) Obtain the marginal cost of a single firm (2 pts.).
C) Find the profit at the equilibrium point and identify whether the firm makes positive
profit, normal profits or incurs loss (1 pt.).
D) What price is needed for the firm to stay in the market (2 pts.)?
E) Calculate the output at which marginal costs are minimized (1 pt.)?
Good Luck!
Economics Assignment, January 2024(20%)
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