Microeconomics Answers

A worker's total earnings for one day is $100. He received a $20 fixed payment and consumes 14 hours of leisure. What is the hourly wage rate? Show solutions

Given that income is $200 and the price of good Y is $40, what is the vertical intercept of the budget line? Show solutions

A worker's total earnings for one day is $100. He received a $20 fixed payment and consumes 14 hours of leisure. What is the hourly wage rate? Show solutions

The market for ice-cream has the following demand and supply schedules: 

Price 

Quantity Demanded 

Quantity Supplied 

$ 3 

105 

70 

$ 4 

90 

90 

$ 5 

80 

106 

 $7 

65 

120 

$ 10 

53 

130 

$ 12 

39 

150 

a. Graph the demand and supply curves.  (4 Marks) 

b. What is the equilibrium price and quantity in this market? (2 Mark) 

c. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium?  (2 Marks) 

d. If the actual price in this market were below the equilibrium, what would drive the market toward the equilibrium? (2 Marks)  

PROBLEM SET 1

This problem set is worth 1% of your overall ETT module mark. To obtain the 1%, the problem set must be solved correctly, or a serious attempt at solving the questions must be seen.

You need to show all your working outs.

Problem 1:

Jefferson Chang recorded the average wages of 45 people as follows:

221 254 83 320 367 450 292 161 216 410 380 355 502 144 362 112 387 324 576 156 295 77 391 324 126 154 94 350 239 263 276 232 467 413 472 361 132 429 310 272 408 480 253 338 217

1. Draw a frequency table, histogram, relative frequency (percentage) and cumulative frequency table of this data. For the frequency table, please divide the data in 9 intervals choose as follows: first interval: less than 100, second interval: 100 to 149, third interval: 150-199 and so on and so forth until the last interval: 400 or greater.
2. What is the name given to the line diagram generated by the mid points of a histogram?

Given that income is $200 and the price of good Y is $40, what is the vertical intercept of the budget line? Show solutions.

Given that income is $500 and PX = $20 and PY = $5, what is the market rate of substitution between goods X and Y? Show solutions

A price ceiling imposed below the equilibrium price of a good will cause

Gail works in a flower shop, where she produces 10 floral arrangements per hour. She is paid $10 per hour for the first eight hours she works and $15 an hour for each additional hour she works. What is the firm’s cost function? What are its AC, AVC, and MC functions? Draw the AC, AVC, and MC curves.

Given that income is $500 and P X = $20 and P Y = $5, what is the market rate of

substitution between goods X and Y? Show solutions.