Microeconomics Answers

1) Find consumer's willingness to pay at Q= 1000.

2) find consumer surplus at P= 300.

3) what will be impact on consumer surplus if the price decreses to P= 100.

What is consumer surplus? How is it related to the demand curve?

What is producer surplus? How is it related to the supply curve?

2. You own a small farm near a large city, and you are about to decide whether to work on that small farm or take a job in the city. Your utility depends on your income per day (Y) and on hours of leisure (L). Your daily income from farm work is:

Yf = 20hj - 0.2h2f

where hr is hours of work on the farm, and your daily income from the city job is:

Ye = 1 4hc

where he is hours of work in the city.

a. If you can work either on the farm or in the city, but not both, which sector would you choose?

b. If you can work both on the farm and in the city, how would you allocate your time?

What do you mean by envelop curve.explain with the help of optimum plant size.

What do you mean by envelop curve.explain with the help of optimum plant size.

Explain the profit maximization situation using the TR,TC approach.

Imagine you are the curator of a museum and the museum is running out of funds. So, you

want to increase the revenue of the museum. To do so, should you increase or decrease the

price of museum tickets? Explain.

For each pair of the following pairs of goods, which good would you expect to have more

elastic demand and why?

1)Fresh vegetables or chocolate -chip biscuits

2)Car or bicycle

if the government wants to encourage people to save more ,would a policy of higher interest rates always achieve this? With the help of indifference curve? 8 marks

a. Suppose the price of sugar decreases. Then, will there be a shortage or surplus in the tea leaf market? Explain with a diagram.

b. Suppose there is an increase in the wage of tea farmers. Then, will there be a shortage or surplus in the tea market? Explain with a diagram.

c. How will the market clearing price and the equilibrium quantity be affected by these changes?

Explain in detail with diagram.