Microeconomics Answers

1)     Suppose the average revenue of a short run perfectly competitive firm is 2 and its Marginal cost and fixed cost is given as: MC=3Q² -8Q+6 and TFC=10 then,

A.   Derive the function of TC, AVC and TR

B.    Calculate equilibrium price and quantity

A.   Find the profit at the equilibrium point and identify whether the firm makes positive profit, normal profits or incurs loss.

B.    What price is needed for the firm to stay in the market? 

Does a competitive firm’s price equal the minimum of its average total cost in the short run, in the long run, or both? Explain.

Does a competitive firm’s price equal its marginal cost in the short run, in the long run, or both? Explain

Under what conditions will a firm exit a market? Explain

Explain the concept of the long run economic growth and the key idea of Solow Growth model. Also explain how the Solow growth model is appropriate to long-run growth analysis.

⦁ Explain the Law of diminishing return and why is it applicable especially in agriculture sector?

⦁ What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

Given u(x,y)=10x0.6y0.4 marginal utility of two commodities when x=2 and y=3

Derive the equations of the expansion path, given the following production

function: loge W = O.4loge M + O.6Ioge N .

where, W denotes production quantity and M and N are quantities of factor inputs:

the respective prices of N and Mare pn and pm

Given that the demand for good X is more elastic in country A than country B while the

supply conditions are the same, answer the following questions.

a) Compare the before trade price of X in country A and B.

b) Which country will be importer of X and which country will be exporter?

c) What will happen to the price of X in country A and country B during the process

of international trade?

d) What does the price change in country A result on quantity demand, quantity

supply of domestic producers, and supply?

e) What does the price change in country B result on quantity demand, quantity

supply of domestic producers, and demand?