Microeconomics Answers

Where does government import price floor and price in a certain communities who are the beneficiaries of both.

Suppose the demand curve for a product is given by Q = 300 – 2P + 4I, where I is average income measured in thousands of dollars. The supply curve is Q = 3P – 50.

a. If I = 30, find the market clearing price and quantity for the product.

b. If I = 60, find the market clearing price and quantity for the product.

c. Draw a graph to illustrate your answers.

Q=400-2P+4i and Q=100+30

Suppose that two identical firms produce widgets and that they are the only firms in the

market. They have identical constant marginal costs equal to 30 and no fixed costs. Price

is determined by the following demand curve : P=150-Q where Q=Q1+Q2

a. Find the Cournot–Nash equilibrium outputs. Calculate the price and profit of

each firm in this equilibrium.

b. What is the market equilibrium price and quantity when each firm behaves as a

Bertrand duopolist choosing prices? What are firms’ profits?

c. If firm 1 is a leader and firm 2 is a follower, how will the outcome in (a)

changes?

d. Draw a table to compare price ,quantity and profit among the three oligopoly

models , perfect competition and monopoly model.

 If the price of one of the goods rises by 5 per cent, what will happen to the demand for the other good, holding other factors constant?

The demand function is Q = 200 - 5p, and the supply function is Q = -40 + 3p.determine the equilibrium price and quantity

Is there theoretically ever a situation in economics where accounting profit is equal to economic profit?

Explain the difference between efficiency and equity.

Elucidate the role of the government in enhancing efficiency and equity

Assume you are the Minister of Finance and need to raise revenue by choosing to tax a specific good, such as cigarettes or jewellery. Suppose that cigarettes have an inelastic demand, while jewellery has an elastic demand. Based on their elasticity, would you tax jewellery or cigarettes? Explain.

The following table shows the daily supply and demand for chicken burgers at a sporting event:

Price (RM) Quantity demand (units) Quantity supply (units)

4.00 110 420

3.50 160 380

3.00 240 240

2.50 320 160

2.00 410 96

a) What is the equilibrium price of chicken burgers? Discuss your reason.

b) If the organizer of this sporting event decide to set the price at RM4.00, how many chicken burgers should be sold? Write your answer.

c) One of the burger stall in this sporting event is offering free fries for every 3 chicken burgers purchased but customers. Describe how does this offer may affect customers demand?