Microeconomics Answers

3.- From the TUx schedule in Table:

a) Derive the MUx Schedule.

b) Plot the TUx and the MUx schedules and indicate the saturation point.

Qx 0 1 2 3 4 5 6 7 8 9

TUx 0 7 13 18 22 25 27 28 28 27

The price of good A falls. This causes an increase in the price of good B. Goods A and B are therefore complements.

1

a) List four (4) segments of the circular flow.         

b) Name and explain the importance of two markets in a circular flow

2 Suppose the following demand and supply functions are given as:

 Qs = 4 + 4P and Qd =40 - 8p.

a)    Calculate the market clearing price and quantity for the above market and show the results on the graph.                                                                                            [05]

b)    Suppose the price increase by 100%, what will happen to the quantity demanded and quantity supplied. Show the changes on a new graph.                                     [05]

3 Name and explain two (2) types of disequilibrium in the market.

4 Differentiate between movement along and a shift in demand curve.                        [02]

5 List any two (2) determinants of demand and explain how each can change the demand curve.  

Please give answer for assignment of managerial Economics

) Suppose the government can redistribute income with a lesser cost from relatively rich to relatively poor people. What effect does redistribution have on average health? 

Show diagrammatically the relationship between average product and marginal product. Can there be a range of output in which marginal product falls but average product continues to rise? Give reasons.

Draw the expansion path of a firm with the help of ISO QUANT analysis.

Jane has a utility function of the form: U=x y. The price for x is 2 , the price for y is 1 and her income is 40.

i). Derive the marginal utilities of the above function.

ii) Give an expression of the marginal rate of substitution between x and y

iii) use the Lagrange method to find the optimal choice of Jane.

iv) Find the value of & and give the economic interpretation of the Lagrange multiplier.

b) Explain what is monotonic function and give examples of such. show that an even power may change the sign of the monotonic function.

7. Consider the following Demand-Supply Equations

Qd =30-2P

Qs =6+2P

i) What is equilibrium?

ii) Find the equilibrium price and quantity. Also draw the graph.

Define elasticity of demand. As the price of good X rises from $10 to $12, the quantity demanded

of good Y rises from 110 units to 116 units. Are X and Y substitutes or complements? What is the

cross elasticity of demand?