Microeconomics Answers

Show that   〖MU〗_x/P_x = 〖MU〗_y/P_y = 〖MU〗_n/P_n = λ

Monopolistic market has characteristics of both perfectly competition and monopoly market, what makes it different from these two, how price and output can be determined in monopolistic market structure. 

Given that Q_d= -266p+3550 and Q_s=(-1*(-240p))+1526 [10 marks]Determine the equilibrium price and quantity and hence draw and label the equilibrium diagram.  

Suppose a firm uses inputs of labour, L, and capital, K, to produce its output, Q, according to the production function Q = f (K,L) =K 1/4 L 1/2 . Labour is paid an hourly wage of w and the rental price of capital is r. The firm sells its output at a price of P per unit.

Determine the firm’s optimum levels of the two inputs

There was the so called first oil shock in 1973-1974. As a result, the price oil increased in four times. Consequently, price of gasoline increased as well. It reached in people buying smaller economic cars, Demand for large cars therefore decreased which resulted in lower number of large cars produced at lower price. Can you present this situation graphically using the concept of demand and supply and equilibrium?

Elif can produce 6 pies or 30 cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1 hour.c) What is the opportunity cost of producing pies for Elif? What is the opportunity cost of producing pies for Ahmet? d) What is the opportunity cost of producing cakes for Elif? What is the opportunity cost of producing cakes for Ahmet? e) Who has a comparative advantage in producing pies and who has a comparative advantage in producing cakes? f) On the PPF lines, show what Elif produces and what Ahmet produces when they specialize. g) Suppose that they set the exchange price as 1 Pie = 3 Cakes. If they specialize and trade, show an exchange situation that is beneficial for both (compared to the situation you found at part (b))? h) What is the minimum and maximum exchange price they could have determined for an exchange that will be beneficial for both of them?

Kim and Raj have been married for a very long time but they have "coffee issues." Kim's invese deman curve for cups of coffee is  = 10 - 2q while Raj's inverse demand curve for cups of coffee is  = 5 - q. What is their joint demand for coffee when the price per cup of coffee is $4 and $6, per cup, respectively?

Because of increasing marginal cost, most supply curves are

The production for a productive is given by q=100KL. If the Price of capital is 120€ per day and the Price of labor 30€ per day, what is the minimum cost of producing 1000 units of output

You are given the data below for 2008 for the imaginary country of Amagre, whose currency is the G.

• Consumption 350 billion G
• Transfer payments 100 billion G
• Investment 100 billion G
• Government purchases 200 billion G
• Exports 50 billion G
• Imports 150 billion G
• Bond purchases 200 billion G
• Earnings on foreign investments 75 billion G
• Foreign earnings on Amagre investment 25 billion G

1. Compute net foreign investment.
2. Compute net exports.
3. Compute GDP.
4. Compute GNP.

In addition to responding with a quantitative answer, briefly describe how you arrived at your answers.