Microeconomics Answers

Question 1. Nimbus, Inc., makes brooms and then sells them doorto-door. Here is the relationship between the number of workers and Nimbus’s output in a given day: Workers Output Marginal Product Total Cost Average Total Cost Marginal Cost Workers Output Marginal Product Total Cost Average Total Cost Marginal Cost 0 0 1 20 2 50 3 90 4 120 5 140 6 150 7 155 a) Fill in the column of marginal products. What pattern do you see? How might you explain it? b) A worker costs $100 a day, and the firm has fixed costs of $200. Use this information to fill in the column for total cost. c) Fill in the column for average total cost. (Recall that ATC=TC/Q.) What pattern do you see? d) Now fill in the column for marginal cost. (Recall that MC=ΔTC/ΔQ.) What pattern do you see? e) Compare the column for marginal product and the column for marginal cost. Explain the relationship. f) Compare the column for average total cost and the column for marginal cost. Explain the relationship.

Question 2. Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD: Demand: P = 1,000 − 10Q Total Revenue: TR = 1,000Q − 10Q2 Marginal Revenue: MR = 1,000 − 20Q Marginal Cost: MC = 100 + 10Q where Q indicates the number of copies sold and P is the price in Ectenian dollars. a. Find the price and quantity that maximize the company’s profit. (Monopoly profit) b. Find the price and quantity that would maximize social welfare. (Competitive profit

Given a short run cost function as TC= -Q³-2Q²+60Q+100, find the maximum value of AVC and MC.

a. Determine the total fixed cost(TFC) for producing 100 and 300 units of outputs, respectively.

b. What is the average fixed cost (AFC) for 100 and 300 units of outputs?

Cosider the following short run production:

Q=6L²-0.4L³

a. Find the value of L that maximize out put.

b. Find the value of L maximizes marginal product.

c. Find the value of L that maximizes average product.

Given utility function U=X^0.5Y^0.5 Where P_x=4 Birr and p_y=4 Birr and the income of the consumer M=240

a. Find the utility maximizing combination of X and Y.

b. Calculate marginal rate of substitution of X for Y (MRS_x,y) at equilibrium and interpret your result

What is the 3 causes of lower income in Malaysia?

. The soccer board persuaded government to impose a price floor of $40 per ticket of soccer game

which is above the equilibrium price of $35. As a result of this policy, do more or fewer people will

attend soccer game and what problem may arise? Briefly discuss with a graph.

Suppose that the firm operates in a perfectly competitive market. The market price of its product is $10. The firm estimates its cost of production with the following cost function: TC= -4Q2+Q3 + 10Q + 2

A) What level of output should the firm produce to maximize its profit?

B) Determine the level of profit at equilibrium.

C) What minimum price is required by the firm to stay in the market?

1. Market research shows that for an increase in price by $1/kg, quantity demand decreased by 250 Kg.
2. In addition, when the price is $1/kg, 1500 Kg of apple is demanded in the country

what is Qdx?

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