Microeconomics Answers

Given the out put Q= 2LogL + 4Logk, PL =$4, PK =$12.

Price of the goods is given Po.

A. Find the derive demand function for labour and capital.

B. Establish the supply function

C. Determine the expansion path expression for labour and capital

A firm has been the product function Q= InL +2Ink. Derive the input demand law for both L and K in term of the product price P when the facor prices are PL =2, Ok =8. Hence derive the supply function for the firm product given the out as a function of the product price .

Given Q=4LK +L^2 , Labour cost is 2 and cost is 1, find the maximum out put and the level k and L at which it is achieve when total input cost are fixed at $105

B. Verify that the ratio of marginal product to price is the same for both input at the optimiub

Suppose the intercept of the demand function increases by two (2), while the slope remains the same. If the supply function remains the same, estimate the new equilibrium price and quantity

c. Demonstrate graphically, the effect of the increase in the intercept of the demand function in (b) above on the equilibrium quantity and price. What generalization can you come up with from the resulting graphical analysis? (7 Marks)

Suppose the absolute values of the intercept and slope of the demand function

are approximated to be ten (10) and three (3) respectively. If the absolute

values of the intercept and slope of the supply function are assessed to be six (6),

and five (5) respectively, calculate equilibrium price and quantity (4

- Suppose the absolute values of the intercept and slope of the demand function

are approximated to be ten (10) and three (3) respectively. If the absolute

values of the intercept and slope of the supply function are assessed to be six (6),

and five (5) respectively, calculate equilibrium price and quantity (4 Marks)

- Suppose the intercept of the demand function increases by two (2), while the

slope remains the same. If the supply function remains the same, estimate the

new equilibrium price and quantity (4 Marks)

- Demonstrate graphically, the effect of the increase in the intercept of the

demand function in (b) above on the equilibrium quantity and price. What

generalization can you come up with from the resulting graphical analysis?

(7 Marks)

The demand for tickets to an Ethiopian Camparada film is given by D(p)= 200,000-

10,000p, where p is the price of tickets.If the price of tickets is 12 birr, calculate price

elasticity of demand for tickets and draw the demand curve?

Suppose the price of Fanta falls from R18 to R14 per bottle, and the quantity demanded rises from 250 to 400 bottles a day.  

1.1.1 Calculate the price elasticity of demand using the point elasticity formula.

Draw a diagram illustrating the impact of a tax cut on aggregate spending and explain how a cut innet taxes will affect households and business firms?