Microeconomics Answers

What is price elasticity of demand? Do you expect the price elasticity of demand for the following goods to be elastic or inelastic? Elaborate your answer.

Beef and Chicken

Haircare products available in the market.

Apple Inc. products.

Insulin for diabetes patients.

Use of electricity.

Question

A firm has the following information on production and costs from past data:

Output (Y) 0 6 12 18

Total Cost (TC) 9 2775 5361 8199

If the total cost function is known to be TC=aY3+bY2+kY+f, and the demand for the product of the firm is Y=320-(1/2)P. answer the following:

Determine the coefficient of the cubic cost function.

Derive all cost and revenue curves and the profit function.

Show that the MC cuts the AVC when AVC is at its minimum point. Plot the relevant graph indicating all points.

Q=60,000L square -1000L 3

Consider the following policies, each of which aimed at reducing violent crime by reducing the use of guns. Illustrate each of these proposed policies in a supply-and-demand diagram of the gun market.

a)a tax on gun buyers

b)a tax on gun sellers

c) a price floor on guns

d) a tax on ammunition

A firm has found a way of using first-degree price discrimination. Demand for its product is given by

P = 20 – 2Q

Marginal cost is constant and equal to $6.

i) With first-degree discrimination, what will be the profit-maximizing rate of output? How much economic profit will the firm earn?

ii) What will be the profit-maximizing rate of output if the firm does not discriminate and sets one price for all customers? How much economic profit will the firm earn in this case?

A firm has the following revenue and cost functions.

Determine the quantity level at which the firm maximizes its total profit.

(Hint: use marginal revenue = marginal cost rule) (

Explain the term price elasticity of demand? How is it measured? What factors influence market

demand for products? If the price elasticity is -3 and RM 100 is the marginal cost of product

X, what should be the optimal sale price?

(Hint: apply the mark-up rule) 

Mr. Hamid Mohammad is planning to pursue MBA studies. Initial inquiry shows that he will have to pay RM 25,000 as tuition fee, buy books for RM 1000, pay for transport RM 500. The MBA study programme will extend over 15 months. Mr Hamid is working now with a salary of RM 2,500 per month.. Being a full time student, he will have to forego the income from his present job for the period of study. Work out the (a) Financial cost, and (b) the Economic Cost of doing MBA (Hint: Identify implicit costs and explicit costs) 

a consumer has a utility function u(x₁,x₂) =max{x₁,x₂} what is the consumer's demand function for good 1?

P1 = 32 − 2Q1

P2 = 22 − 0.5Q2