Microeconomics Answers

The market price of pizzas in a university town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because several pizza parlours in the area have recently gone out of business. Other students attribute the increase in the price of pizzas to a recent decrease in the price of beer.

13. Consider a perfectly competitive market described by the supply function P = 20 + 0.3Q and demand function P = 120 - 0.2Q. The total economic surplus (consumer surplus + producer surplus) generated by the good when the market is in equilibrium is:
A. $4,000
B. $6,000
C. $8,000
D. $10,000
E. $16,000
F. $20,000

How can I incorporate income in the marginal analysis

. Suppose consumer A’s preferences between goods x and y are represented
by the utility function uA(x, y) = min{x + 2y, 2x + y}, while consumer B’s
preferences are represented by the utility function uB(x, y) = min{2x +
4y, 4x + 2y}. Suppose consumers A and B have the same income. Compare
these two consumers’ consumption bundles

Mr. Ali has a job as a pharmacist in Shaheen chemist earning PKR-30,000 per year, and he is deciding whether to take another job at Walt chemist as the manager of for PKR-40,000 per year or to purchase a franchise of Watson chemist that generate revenue of PKR-200,000 per year. To purchase Watson chemist Ali would have to use PKR-20,000 savings and borrow another PKR- 80,000 at an interest rate of 10 percent per year. The running expenses of new pharmacy would be PKR-80,000 for supplies, PKR-40,000 for labor, PKR-10,000 for rent, and PKR-5,000 for utilities. Assuming zero tax and repayment of principal loan after three years, answer following questions. a) What would be business and economic profit of Jones in case he purchase Watson chemist? b) If there will be a new pharmacy opens up in close vicinity after three years, what would be economic profit of the Watson chemist in three years? c) What theory of profit will apply on the three years earning of Watson chemist?

lonewolf ltd is the sole manufacturer and supplier of solar panels in the country. as a result of this the CEO claimed in a recent meeting that he can set any price he wishes and sell as many units of his product as he wants at that price. is this correct? motivate your answer

Two individuals are involve in a collective business, each year Mr.A received 60 % of the profit while B receive 35% of remaining. The leftover profit is allocate for charity. The annual revenue of the business is $500,000 while the operating cost is $-175000 for inputs (including labor and capital), $-70,000 for rent, and 15% of rent as utilities. By profession Mr. A is an engineer and can earn $7,000 per month by working in automobile industry. Similarly, Mr.B can earn $5000 per annum by working in a nearby school. Assuming Zero income and sale tax, answer following questions.

a) What would be business and economic profit of Mr. A? b) Which shareholder is economically well-off and Why? c) What would be their total revenue in 15 years if the growth rate of the business is 2.3% per annum?

The total business value of KFC in 1990 was $ 106,940. The management is expecting growth of 1.3 percent. How long KFC business would take to reach at $154,287 worth.

Mr. Ali has a job as a pharmacist in Shaheen chemist earning PKR-30,000 per year, and he is deciding whether to take another job at Walt chemist as the manager of for PKR-40,000 per year or to purchase a franchise of Watson chemist that generate revenue of PKR-200,000 per year. To purchase Watson chemist Ali would have to use PKR-20,000 savings and borrow another PKR- 80,000 at an interest rate of 10 percent per year. The running expenses of new pharmacy would be PKR-80,000 for supplies, PKR-40,000 for labor, PKR-10,000 for rent, and PKR-5,000 for utilities. Assuming zero tax and repayment of principal loan after three years, answer following questions. a) What would be business and economic profit of Jones in case he purchase Watson chemist? b) If there will be a new pharmacy opens up in close vicinity after three years, what would be economic profit of the Watson chemist in three years? c) What theory of profit will apply on the three years earning of Watson chemist?

1. What role do incentives play in each of the following situations?

a. You learn that you can resell a ticket to next week’s football game for twice what
you paid.

b. A provincial government announces a “sales tax holiday” for back-to-school
shopping during one week in August.