Microeconomics Answers

3. Imagine a perfectly competitive firm producing good A with cost function TC=400+20Q-2Q ² +2/3Q ³ , where Q is quantity produced

a. determine the firm’s short run supply curve

b. What is the profit maximizing level of output when price of A is birr 180?

4. Suppose the perfectly competitive price is given as $46 and the total cost of the firm is given by TC=14X+2X ² , find

a. The profit maximizing level of output for the firm?

b. The profit of the firm?

1. The marginal cost of a trader has been found to be MC = 3Q² +8Q+ 400 . Determine the total variable cost of producing 100 units of the trade’s product.

2. If the fixed cost of manufacturing a product is ETB 10, 000 and the marginal cost at Q units of output is ETB(60+2.5Q). Find:

a. The function for the total cost of manufacturing x units.

b. The total cost of 200 units.

1. The marginal cost of a trader has been found to be MC = 3Q² +8Q+ 400 . Determine the total variable cost of producing 100 units of the trade’s product.

2. If the fixed cost of manufacturing a product is ETB 10, 000 and the marginal cost at Q units of output is ETB(60+2.5Q). Find:

a. The function for the total cost of manufacturing x units.

b. The total cost of 200 units.

3. Imagine a perfectly competitive firm producing good A with cost function TC=400+20Q-2Q ² +2/3Q ³ , where Q is quantity produced

a. determine the firm’s short run supply curve

b. What is the profit maximizing level of output when price of A is birr 180?

An industry currently has 100 firms, each of which

has fixed costs of $16 and average variable costs as

follows:

Quantity Average Variable Cost

1 $1

2 2

3 3

4 4

5 5

6 6

d. Graph the long-run supply curve for this market,

with specific numbers on the axes as relevant.

The residents of the town Ectenia all love economics,

and the mayor proposes building an economics

museum.

The museum has a fixed cost of $2,400,000

and no variable costs. There are 100,000 town residents,

and each has the same demand for museum visits:

QD = 10 − P, where P is the price of admission

Let the price of pizza (X) is $2 per unit and the price of shakes (Y) is $ 1

per unit. The budget is $ 38. Marginal utility of X is MUx = 100 – 10x,

marginal utility of Y is MUy = 80 – 10y. Find:

How many of quantity of each item should be purchased in order to get

a maximum satisfaction.

The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: 𝑄𝐷=10−𝑃 where P is the price of admission.

d) For the break-even price you found in part (c), calculate each resident’s consumer surplus. Compared with the mayor’s plan, who is better off with this admission fee, and who is worse off? Explain.

e) What real-world considerations absent in the problem above might provide reasons to favor an admission fee?

The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: 𝑄𝐷=10−𝑃 where P is the price of admission.

Suppose a hotel exhibits constant returns to scale as it increases its output. If it increases all its inputs by 10%, its:

select

A. total cost will increase by less than 10%

B. average total cost will increase by 10%

C. output will increase by 10%.

D. long run average cost curve will shift to the right by 10%

A used car salesman purchases a car from its previous owner at a price of $4,500, although the owner was willing to sell it for as little as $4,000. The salesman later sells the car to a new buyer for $6,000, although that buyer was actually willing to pay up to $6,500.

What percentage of the value created by the trade is captured by the buyer who purchases the car from the used car salesman?