Microeconomics Answers

Assume, in an industry where there are no barriers to entry and firms are making an economic loss in the short run.
a) What options are available to firms in the short run to minimise their losses?
b) Using demand and supply analysis together with the cost curves, explain why the actions to minimise loss lead to firms’ making normal profit in the long run? 3 + 3 = 6 Marks

Assume the price of a good increase from $6 to $8, leading to a fall in quantity demanded from 50 to 40 units. Calculate the price elasticity of demand for the good at this price range and explain how total revenue will be impacted by the increase in price?

Discuss how the knowledge of price elasticity of demand can assist firms with their pricing strategy

Given fix cost is RM 15 and variable cost is RM 2 per unit.
1. State the function of TC, AC and MC
2. State the quantity if AC is minimum
3. Prove it if AC = MC

Given demand function; P=570-0.3Q
a) Find total revenue
b) Revenue function
c) Marginal revenue at the output of 30units
d) quantity that maximise the total revenue
e) maximum total revenue

Hi there, I am a second year university economics students. Generally, I am quite good with economics, but my latest assignment on game theory has been making me pull my hair out. Please help. I can't make heads or tails of any of it!

https://drive.google.com/file/d/0Bz7khTo1Tp0RRkQ3UjhoVWRHUDg/view?usp=sharing

You are asked to solve a public good problem with
2 agents. Agent i has utility function a, log (g1 + g2) + x, where g, is the amount of the public good contributed by agent i and xi = amount of private consumption of agent i. The budget constraint of agent i is x, + gi = wi where w, is the initial endowment of agent i. Assuming wi > ai for each agent,
(a)compute the Pareto — optimal level of public good provision for this economy.
(b)Describe the voluntary contribution equilibria for different values of a1 and a2.

The Nottinghamshire Research Observatory in England calculated that students who attend Nottingham Technical University spend about £2,760 each in the local economy for a total of £50.45 million. In total, the impact of their spending on the local economy is £63 million. Calculate the size of the student spending multiplier

You have been hired as an economic consultant to assess the potential of profitably entering the market for gourmet coffee (examples are Starbucks and Coffee Bean). The firm that has hired you would like for you to make your recommendations on what are the most important factors that must be considered in order to successfully penetrate the market. The firm also wants your advice (in addition to production of the coffee itself) on its interest in opening several distribution or sales points. It would like to have your recommendation on the factors that would be most beneficial to determining the correct location and size for the outlets.

Determine and discuss the most probable market structure of the coffee industry; then prepare a proposal which will be presented to the firm that is hiring you as consultant.

Justo & Company use third-degree price discrimination in selling its product. The demand
equations for the two markets are as follows:
Market 1 P1 = 2.46 - 0.2Q1
Market 2 P2 = 4.54 - 0.8Q2

The marginal cost is $1.20
a. Determine the profit maximizing price and quantity in each market.