Microeconomics Answers

Draw a graph showing that given the supply of a goods ,the less responsive the quantity demanded is to price the greater is the share of the tax paid by consumers in the form of higher prices

If the federal government imposes 0.75 tax for each litre of fuel bought and sold with the objective of reducing fuel consumption explain with diagram

1.Suppose a consumer consuming two commodities X and Y has the following utility function TU= X0.5 Y0.5. If price of good X and Y are 2 and 3 respectively and income constraint is Birr 60.

A. Formulate the budget equation

B. Find the MRSXY at optimum.

C. Find the quantities of good X and Y which will maximize utility

Please refer on the diagram.

At point C the price elasticity of demand is 1. Along line segment EC of the demand curve, the demand is

Q = L2 K. Calculate the elasticity of substitution

10. The Bok Chicken Factory is trying to figure out how to minimize the cost of producing 1200 units of chicken parts. The production function is q = 100L0.5 K0.5. The wage rate is birr 9 per hour and the rental rate on capital is birr 4 per machine hour

A.B. Find the maximum output that can be produced for a total cost of birr 720.

 A monopolist always faces a demand curve that is

a. perfectly inelastic.

b. perfectly elastic.

c. unit elastic.

d. the same as the market demand curve.

Suppose Natasha currently makes ​$57,000 per year working as a manager at a cable TV company. She then develops two possible entrepreneurial business opportunities. In​ one, she will quit her job to start an organic soap company. In the​ other, she will try to develop an​ Internet-based competitor to the local cable company. For the​ soap-making opportunity, she anticipates annual revenue of ​$483,000 and costs for the necessary​ land, labor, and capital of ​$434,000 per year. For the Internet​ opportunity, she anticipates costs for​ land, labor, and capital of ​$3,204,000 per year as compared to revenues of ​$3,273,000 per year.

a. What would she make in profits if she opens her organic soap​ company? ​$

enter your response here

b. What would she make in profits if she opens her Internet​ business? ​$

enter your response here

Part III: Answer the following questions as per the instructions given.

1.Given:

 P= Br. 10      and       TC = 120 + 4Q²

A. Find the profit maximizing level of price and quantity.

B. What will be the total profit?

2.Briefly explain the types of returns to scale.

3.Define market and State some of its elements.

Part II: Choose the best answer for the following statements

1. As per Ordinalists, it is assumed that

A. Utility is not measurable   B. Constant marginal utility of money

D. All                                           C. Diminishing marginal   

E. A and C 

2. Which one of the following is False?

A. The demand will be more elastic if there are close substitutes for it.

B. Necessities are more price elastic than luxuries

C. Demand is more elastic in the long run.

D. None

3. At zero unit of out put

A. Total cost is equal to fixed cost

B. Total variable cost is greeter than fixed cost.

C. Fixed cost is equal to zero

D. Variable cost is equal to total cost

4. In imperfect competition

A. Demand curve is elastic

B. Average revenue is negatively sloped

C. There are many sellers

D. Demand curve is up ward sloping

5.Total utility minus total amount of money spent.

A. Consumer deficit          B. Consumer surplus

C. Producer surplus          D. Producer deficit