Microeconomics Answers

a.) Assume the demand for wine in a small isolated town is P = 200 - Q. Two fims, A and B are the sole producers of the product, and they display Cournot duopolists tendencies. Both firms have a same total cost function of TCi = 40 + Qi. Find the profit maximizing output level for each firm, market price and profit for each of the firm. [10marks] b.) The Chief Executive Officer of the town intents to subsidize firm A to raise its output to that of a Stackelberg leader, how large should the subsidy be in terms of output? [7 marks] c.) What happens in a duopoly if both firms try to act as the Stackelberg leader? [4 marks] d.) Briefly explain why the intersection of the best-response functions is the Cournot equilibrium [4 marks]

SRTC = 8 + 1⁄2q2 and therefore MC = q.

If the minimum point of the short-run ATC curve for all firms(existing and potential)is also the minimum point of the long-run average cost curve (LRAC), calculate the long-run equilibrium price, market quantity, and firm quantity. What is the long-run equilibrium number of firms in the industry? [4]

do we need cashless transaction what are the modes of cashless transaction

billy madison consumes. 100 units of x and 50 units of y. the price price of x roses from 2 to 3. the price of y remains at 4?

a) how much must billy's income rise so that he can exactly afford 100 units of x and 50 units of y

What is a Pareto superior allocation?

When is an allocation said to be Pareto improving?

At what point is Pareto Efficiency reached?

If Veronica Vaughn spends all of her daily income on cigarettes and Yoo Hoo, she can afford 10 packs of cigarettes and 10 bottles of Yoo Hoo. She can also afford 6 packs of cigarettes and 22 bottles of Yoo Hoo.

Draw verconica's daily budget set with packs of cigarettes on the x axis and bottles of yoo-hoo on the y axis

If Veronica Vaughn spends all of her daily income on cigarettes and Yoo Hoo, she can afford 10 packs of cigarettes and 10 bottles of Yoo Hoo. She can also afford 6 packs of cigarettes and 22 bottles of Yoo Hoo.

1. What is the relative price of cigarettes in terms of bottles of the yoo - hoo ( ie what is the ratio of prices Pc/ Py)

2. Exactly how much income does Veronica earn in one week if the price of cigarettes is $6? Write down the budget equation for Veronica that is a function of the packs of cigarettes C,and the number of bottle of yoo- hop, Y.

Use a graph and indicate the production of 1000 units of output at minimum cost.

Consider the market for minivans. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply increase or decrease. Then draw a diagram to show the effect on the price and quantity of minivans.

a.People decide to have more children

b.A strike by steelworkers raises steel price

c.Engineers develop new automated machinery for the production of minivans

d.The price of sports utility vehicles rises

e.A stock-market crash lowers people's wealth

Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts.

a) A hurricane in South Carolina damages the cotton crop

b) The price of leather jackets falls

c) All colleges require morning exercise in appropriate attire

d) New knitting machines are invented