Microeconomics Answers

what is the meaning of isocost slope? Provide a mathematical explanation.

Show that if the importing country faces an upward sloping foreign supply curve (excess supply curve), a tariff may raise welfare in the importing country.

Definition of long run profit maximization and example?

in a market for a given commodity the quantity demand was 14 units hen the market price was 6 birr, when price was increases to 8 birr the quantity demand was decreased to 12 units. what is the elasticity of demand ?

Consider the following payoff matrix, where the payoff are profit/losses of a firm in millions

Firm B

Low Price High Price

Firm A Low Price (10, 10) (30, -10)

High Price (-10, 30) (40, 20)

Based on this payoff matrix in table, determine:

(i)                Whether firm A has a dominant strategy

(ii)               Whether firm B has a dominant strategy

(iii)              The Nash equilibrium if there is any.

What is a foreign exchange rate? (2) (a) The rate at which the currency of one country trades for the goods of another country. (b) The rate at which one country’s goods trade for those of another country. (c) The rate at which currencies of different countries are exchanged. (d) The rate at which one country’s currency trades for gold provided by another country

scientists reveal that consumption of oranges decreases the risk of diabetes and at the same time farmers uses a new fertiliser that makes orange tree more productive. state what effect this will have on equilibrium price and quantity

Five students share and apartment and all enjoy music equally. The marginal utility of each student is MU(Q) = 5 − 1 50 Q where Q is the number of CD’s in the apartment. Assume that a CD is a pure public good, namely it can be enjoyed but all and nobody in the apartment can be excluded from listening to it even if s(h)e has bought it. ) The cost of a CD is $4. What is the socially optimal number of CD’s in the apartment?

1. With aid of diagrams derive the demand curve of the consumer preference from the total utility graph.
2. Using graphical approach distinguish between Diminishing utility, Marginal Benefits and marginal Cost

n increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.

(Note: Five marks will be awarded for the graph and five marks will be awarded for the explanation.)