Microeconomics Answers

Suppose the price of the good is 5, and that is increases by 5\% . As a consequence, the demand of another good decreases by 20 * o/o . Calculate the cross-price elasticity for the other good. Is the other good a substitute good or a complementary good to the first one?

Firm’s total cost function is given as 4Q3 – 40Q2 + 10Q. This firm operates in a perfectly competitive market. What is its profit maximizing level of output?

Production function of a firm has the following form: 

Q= 48L2 – 4L3 , where L stands for amounts of labor and Q represents level of output

Find the level of output at a point where marginal product reaches its maximum.

a firm faces the following demand function: Q=25 – 0,25P. Its total cost function is given by the following relation: TC=2Q2 – 50Q+850. Calculate firm’s fixed cost at the level of output of 520 units.

1. A product’s production function is given as Q=50KL. Assume all factors of production are variable. What would be the minimum level of output of production if a firm wants to produce 2000 units of output. Price of labor is 20, price of capital is 80.

discuss with the use of examples, whether the government should directly provide certain goods and services in an economy

In a perfectly competitive and constant cost industry, all firms are identical. If the market demand function is:Q^D=600-P, a typical firm’s cost function is:

TC=q³- 20q² +120q

1. In the long run, what is the firm’s equilibrium production decision?
2. In the long run, what is the market equilibrium price and quantity? What is the industry’s long run supply curve?
3. In the long run, how many firms will stay in the industry?
4. If the government decide to impost a $7 tax per unit, what is the new long run equilibrium market price and quantity? 
5. How many firms are producing after the tax? 

Think about a monopolist, the market (inverse) demand function is: P = 30-2Q, his cost function is: C(Q) = 5+ Q²

1. What is the monopolist’s optimal quantity and price? 
2. What is the monopolist’s highest profit? 

Think about a monopolist, the market demand function is: Q_D = 100/P², the monopolist’s cost function is: C(Q) = 2Q.

1. Based on the definition of price elasticity of demand: e_D,P= (dQ_D/Q_D​)/(dP/P), what is the price elasticity of the market demand curve in this case? 
2. What is the monopolist’s optimal price based on the inverse elasticity rule? 
3. If the government decide to impose a $1 per unit tax on the output, please use the inverse elasticity rule to decide if the monopolist’s optimal price will increase more than $1 after the tax?

2.given TC=400-50Q+Q² P=80 .find the optimal quantity produced and sold by the firm so that they are maximizing profits