Microeconomics Answers

Cold Drink and pizza are complements because they are often enjoyed together. When the price of Cold Drink rises, what happens to the supply, demand, quantity supplied, quantity demanded, and the

price in the market for pizza

Suppose that a technological advance in Japan lowers the world price of televisions.

a. Assume the U.S. is an importer of televisions and there are no-trade restrictions. How does technological advance affect the welfare of U.S consumers and U.S producers? What happens to total surplus in the United States?

b. Now suppose the United States has a quota on television imports. How does the Japanese technological advance affect the welfare of U.S consumers, U.S producers, and the holders of import licenses?

Suppose the short run production function can be represented by

Q=60,000L^2-1000L^3 then, determine

A) the level labor employement that maximazes the level of output

B) the level of employment that maximazes APL and the maximum APL

suppose that in a year an American worker can produce 100 shirts or 20 computers, while a Chinese worker can produce 100 shirts or 10 computers. a. Graph the production possibilities curve for the two countries. Suppose that without trade the workers in each country spend half their time producing each good. Identify this point in your graph. b. If these countries were open to trade, which country would export shirts? Give a specific numerical example and show it on your graph. Which country would benefit from trade? Explain. c. Explain at what price of computers (in terms of shirts) the two countries might trade. d. Suppose that China catches up with American productivity so that a Chinese worker can produce 100 shirts or 20 computers. What patt predict now?

1. Use your knowledge of externality and relevant models to examine the impact of inadequacies of the vaccine on the market outcomes.
2. Discuss appropriate government intervention to achieve a socially efficient vaccination volume.

Max enjoys windsurfing and snorkelling. He obtains

the following utility from each of these sports:

Hours Utility from Utility from

per day windsurfing snorkelling

1 120 40

2 220 76

3 300 106

4 360 128

5 400 140

6 412 150

7 422 158

Max has a35 to spend and he can spend as much time

as he likes on his leisure pursuits. Windsurfing equipment rents for a10 an hour, and snorkelling equipment

rents for a5 an hour.

a) Draw a graph that shows Max’s budget line.

b )How long does he spend windsurfing and how long

does he spend snorkelling?

Cold Drink and pizza are complements because they

are often enjoyed together. When the price of

Cold Drink rises, what happens to the supply, demand,

quantity supplied, quantity demanded, and the

price in the market for pizza?

Consider an economy that produces and consumes Bread and Automobile. Data for two different years 2005 and 2010 is given in the following table.

Year. 2005. 2010

Price of Automobiles. 5000$. 6000$

Price of a loaf of

Bread. 10$. 20$

Number of Automobiles

Produced 100$. 120$

Number of loaves

Of bread produced. 500000$. 400000$

* Using the year 2005 as a base year ,

a. Calculate the nominal and real GDP of

2010

b. Find the value of GDP Deflator for the

year 2010 and interpret your result.

c. Calculate the inflation rate in 2010.

Suppose that the firm operates in a perfect compitative market. The market price of his product is 4. The firm estimate its cost production with the following cost gunction

Tc=50+20q-5q2+p.33q3

What is level of output should be the firm produce to maximize its profit

The Department of Agriculture of Economica (DAE) administers the floor price of milk at $4 per pound of milk. To support the price of milk at the price floor, the DAE had to buy up the surplus.

Q = 120 – 20P (Market demand)

Q = 20P (Market supply)

ii) Explain floor price and the purpose for the government to implement the policy.

iii) Use the equations to determine the quantity demanded and quantity supplied of milk at

the floor price. Explain the market outcomes of the floor price.

iv) Calculate the consumer surplus and producer surplus in the absence of a price floor.

v) Calculate the consumer surplus and producer surplus with the price floor at $4 per pound of milk.

vi) Use the results in parts (iv) and (v) to explain the impact of floor on the economic welfare of consumers and producers.

vii) Calculate the deadweight loss of floor price policy and explain the result.

viii) How much money does the DAE spend on buying up surplus milk?