Microeconomics Answers

a sole supplier earns economic profit in the short run using a labelled diagram to show how much output will be produced and at what price this output will be sold to maximise profit

Eskom is earning economic profits in the short run. explain using a well labelled diagram how much output Eskom wil produce and at what price this output will be sold if Eskom maximises profits?

suppose that you are managing director of a firm that supplies three goods,laptops, USB drives and external hard drives.the price elasticity of the demand for laptops is 2.0,for USB drives is 1.00 and for external hard drives is 0.53 the firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. you are in position to set the prices for these goods.what would be your strategy for each product?

Blue Kashmir Sapphires is generally believed to be a relatively rare gemstone. Use demand and supply curves to illustrate and explain why such a rare item is sold at such a high price

Explain why it is important for the supplier of a good to have information about the price elasticity of demand (PED) for the product.

7. Discuss why a simultaneous decrease in supply and increase in demand for lumber, has an ambiguous effect on equilibrium quantity of sawdust while the change in equilibrium price is certain.

Write short notes on any two of the following:
(a) Envelope theorem
(b) Hidden information
(c) Actuarially Fair Premium

Discuss what is meant by an excess supply in a market. In this case, briefly discuss how price adjusts to clear the market

A ceo earning 5 crores p.a. in a company. another company offers him 5.5 crores p.a. for a new assignment. what would be its opportunity cost?

Sita expects her future earnings to be worth Rs. 100. If she falls ill, her expected future

earning will be Rs 25. There is a belief that she may fall ill with probability of



while

the probability of remaining in good health is



. Let her utility function be given as U(y) =

. suppose that an insurance company offers to fully insure sita against loss of earnings

caused by illness against an actuarially fair premium.

(a) Will Sita accepts the insurance. Explain.

(b) What is the maximum amount that Sita would pay for the insurance?