Microeconomics Answers

Following information shows that a firm offering a good at different prices

to groups of consumers with different levels of willingness to pay.

Inverse Demand for movies: P1 = 20 – 4Q1

Inverse Demand for students: P2 = 10 – Q2

MC = 4Q LKR /ticket

(a) What price and quantity and maximizes profits if the firm charges each

market?

(b) Demonstrate that charging different prices for the two groups results in

higher profits than charging the same price for everyone.

QS= a+bp, QD = c-hp, what is equilibrium price and quantity demanded ?

what is the formula for measuring the price elasticityof supply? suppose the rice of apples

There is monopolistic competition in the shampoo market. One of monopolistic firms

- DG. Company offers a special shampoo. Over a long period of time, G's total costs

(CK) of this special shampoo production (hi) are expressed by the following function

TC=3q3 - 27q? +100q. DG's total revenues (CZK) are given by the following quadratic

function TR = 63.25q - 6q?.

a) What amount of shampoo will DG produce?

b) What price will DG charge?

c) What profit will DG generate?

d) Present all results in an appropriate microeconomic model of G's behaviour.

You are an analyst employed by an airplane manufacturer that last year sold 40,000 ATR-72

aircrafts at $100,000 each. Your market research indicates that:

I. the price elasticity of demand for your aircrafts in −0.5. (or +0.5 in absolute value);

II. the income elasticity of demand for your aircrafts is +3.7; and

III. the cross price elasticity for your aircrafts with respect to the price of a comparable jet

manufactured by a competitor is +1.6.

A. Suppose that you expect a ceteris paribus decrease in average incomes of 10% this

year compared to last year. How many aircrafts do you estimate that your company will

sell this year? How will it impact total revenues? 6 marks

B. Assume now that you do not think incomes will change, but that you expect your

competitor will decrease his price by 4%. Assuming that your company does not change

the price of its aircrafts, how many would you expect your company will sell this year?

Now suppose that the only change you expect is a 7% increase in the price of your

aircraft. Estimate sales this year and discuss the impact on total revenues.

Assume now that you do not think incomes will change, but that you expect your

competitor will decrease his price by 4%. Assuming that your company does not change

the price of its aircrafts, how many would you expect your company will sell this year?

Suppose that you expect a ceteris paribus decrease in average incomes of 10% this

year compared to last year. How many aircrafts do you estimate that your company will

sell this year? How will it impact total revenues?

Suppose that you expect a ceteris paribus decrease in average incomes of 10% this

year compared to last year. How many aircrafts do you estimate that your company will

sell this year? How will it impact total revenues?

Graph the supply and demand schedules for hamburger using $5 through $15 as the value of P?