Microeconomics Answers

By using the knowledge of relationships among the various costs of production concepts fill the blank space of the following table

Quantity   TC   TFC TVC ATC AVC MC

0        125    –        –      –        –       –

10          –       –        –       –         –        5    

20          –       –        –      105       –       –

30          –       –      110      –         –      –

40          255     –        –       –        –       –

50            –       –        –       –        3       –

60           –       –        –       –       –       3

1.   By using the knowledge of relationships among the various costs of production concepts fill the blank space of the following table

Quantity TC TFC TVC ATC AVC MC

0 125

  10 5

20 105

30 110

40 255

50 3

60 3

If a consumer daily income rises from Rs. 300 to Rs. 350, his purchase of a good X increases 

from 25 units to 35 units, find income elasticity of demand for X.

 Explain consumer’s equilibrium condition with help of indifference curve approach. How will 

a change in consumer’s income affect his equilibrium?

Air conditioners are a luxury good. a) What does this imply about income elasticity? b) Which two countries would you guess have the highest per capita demand for air conditioners at present? c) If people continue to get richer and global warming continues to increase, what is likely to happen to the quantity of air conditioners demanded? d) And what will this do to global warming? And hence to the demand for air conditioners

Use a truth table to represent the following statement.

Roxanne, Sam and Thomas will attend the play if and only if Vince doesn't attend, but,

if neither Roxanne nor Sam attend, then Vince attend only if Thomas attends.

If the demand function is : 𝑄𝑑 = 1300 − 10𝑃 − 𝑃2 Where P = 20, find the price elasticity of demand (show all working used)  

 Air conditioners are a luxury good. a) What does this imply about income elasticity? b) Which two countries would you guess have the highest per capita demand for air conditioners at present? c) If people continue to get richer and global warming continues to increase, what is likely to happen to the quantity of air conditioners demanded? d) And what will this do to global warming? And hence to the demand for air conditioners

The demand and supply equations for a product are: Qd = 300 – 6P and Qs = -40 + 6P. • Determine the market equilibrium and draw graphs. • Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graphs and explain. • Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus and dead weight loss. 

Given the two-factor product in, Q = 150L0.5K

0.5, wage rate of labour equals to 50 and rental 

cost of capital equals to 40.

Determine the amounts of labour and capital that will minimize the cost of producing 1118 

units of output.