Microeconomics Answers

Explain with diagrams and relevant examples, three categories of price elasticity of demand.

A monopolist faces a demand curve Q = A – P and has a cost function C(Q) = cQ. Derive
the optimal monopoly price and its total profit.

a) If a competitive firm is making a short-run loss, would it be better to produce nothing at all or to continue operating at a loss? Elucidate.


You recently noted that a national beverage company generously assisted in renovations of the basketball arena and library at a large state university, and university officials agreed to an exclusive beverage contract with the company. Was this most likely a benevolent charitable act by the beverage company?

Provide an intuitive explanation for why “buy one, get one free” deal
is not the same as a “half-price” sale. Use demand curve Q=12-2P,
and original price P∗ = 5 to calculate consumer surplus under each
deal.

How will the successful application of robotic technology in Australian higher education impact: a. Supply of education (2.5 marks) b. Demand for education (2.5 marks) c. Marginal cost of education (2.5 marks) d. Fixed costs of education (2.5 marks) Explain using diagrams.

1) What is the shape of marginal cost curve for Netflix in Australia?
2) The latest electric car is expected to be released in Australia shortly. What impact might this have on the market for battery powered bicycles?

Initially, suppose Bellissima uses 1 million hours of labor per month to produce corn and 3 million hours per month to produce jeans, while Dolorium uses 3 million hours of labor per month to produce corn and 1 million hours per month to produce jeans. Consequently, Dolorium produces 15 million bushels of corn and 20 million pairs of jeans, and Bellissima produces 8 million bushels of corn and 48 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of corn and jeans it produces.

Discuss the circular flow diagram with four markets players (household, Firms, the Government and the rest of the world)

1) What is the shape of marginal cost curve for Netflix in Australia?
2) The latest electric car is expected to be released in Australia shortly. What impact might this have on the market for battery powered bicycles?

contrast the price elasticity of demand for bottled water and movie ticket