Microeconomics Answers

Demand for Kristal blanket is given by D_P = 42 − 2p , the supply function is

given by S_P = 5p;

What is the equilibrium price, output, consumer and producer surplus in the market for Kristal blankets?

Neha and Sonam consume only Coke and Pepsi in a two person and two goods exchange economy. Nehaconsumes these two goods in fixed proportions such that she consumes 2 bottles of coke with 1 bottle of Pepsi.Sonam's utility function is given by U = 4P + 3C . In the economy, there is a total of 100 bottles of Pepsi and 200bottles of Coke. If Neha initially had 60 bottles of Pepsi and 80 bottles of coke, then in the equilibrium position,Sonam will consume:​

Shalimar Foods sells Vegetarian Corn Samosa plates for INR 30 each, and serves an average of 625

customers per week. During a recent promotion on the eve of India’s Independence Day

, Shalimarcut its price to INR 25 each and observed an increase in sales to 750 plates per week.a.

Calculate Shalimar’s price elasticity of Demand

 b.

Shalimar is considering permanently lowering its price to INR 28 to increase revenue. Explainc.

How many plates should Shalimar expect to sell at the new price?d.

Does the move make sense in the light of Shalimar’s intent to increase revenue?

Good X is a normal good if an increase in income leads to

a. an increase in the demand for good X.

b. a decrease in the supply for good X.

c. an increase in the supply for good X.

d. a decrease in the demand for good X.

The own-price elasticity of demand for apples is −1.2. If the price of apples falls by 5 per cent, what will happen to the quantity of apples demanded?

a. It will increase 6 per cent.

b.It will increase 4.2 per cent.

c.It will increase 5 per cent.

d.It will fall 3.8 per cent.

In December, the price of Christmas trees rises and the quantity of trees sold also rises. Is this a violation of the law of demand? Why or why not?

Answer with the help of graph

Beef supplies are sharply reduced because of drought in the beef-raising states, and consumers turn to chicken as a substitute for beef. How would you illustrate this change in the beef-market in supply-and-demand terms?

represent by draw the graph

Suppose the market for clean water was initially at equilibrium in Japan. However, the Japanese earthquake and resulting tsunami destroy stores of bottled water and bottled water plants as well as severely damage infrastructure that delivers clean water to Japanese households. How will the market of clean water in Japan respond to this change?

draw a graph

Due to several supply-chain issues the price of computer chips has risen in recent months (this part is true and there is no need to prove it to be so). The result of this change would be to increase the price of automobiles that require many computer chips in their manufacture. 

Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Helang and the Merpati reduce their desired production of guns by the same amount. Which party would get the bigger “peace dividend”, measured by the increase in butter production? Explain.