Microeconomics Answers

a. Categorize each good or service as excludable or nonexcludable. 

b. Categorize each good or service as rival or nonrival.

4. Suppose a firm produces according to the production function Q = AL0.6K0.2, and faces wage rate ₵20, a rental cost of capital ₵10, and sells output at a price of ₵40.

a. Obtain and expression for the factor demand functions if A=2.

b. Compute the profit-maximizing factor demands for capital and labour if A=2.

5. In the short run, a competitive firm has a production function,

Q = f(L) = 2.6667L0.75. The output price is $8 per unit and the wage is $5 per hour. Find the short-

run labor demand curve of the firm.

 A firm has a Cobb-Douglas production function given as q=AX1αX2β

a. Solve for the factor demand functions for labour (X1) and Capital (X2)

b. If the firms’ competitive output price is p find the wage rate

c. What is the share of the firm’s revenue paid to labour and capital?

d. If α=0.6, β=0.2 and A=1 find the LR labour and capital demand curve equations

1. XYZ Co. operates in a competitive market. Its Total Product (Q) is given as Q=f(L)= 3L, and it takes the wage and price as given. Derive the firm's short-run demand for labor as a function of w and p. How much labor will the firm hire if W=₵25 and P=₵150?

2. Show that the quantity of labor(L) and capital(K) that a firm demand decreases with a factor’s own factor price (w for labor and r for capital) and increases with the output price (P) when the production function is a Cobb-Douglas of the form 𝐪 = 𝐀𝐋𝛒𝐊𝛗

Describe a situation where opportunity costs arose in your decision making as a student.

 A consumer’s weekly income is $5000, the price of a cell phone is $1250, and the price of a watch is $500. What quantity of cell phones and watches will maximize the consumer’s utility if they spend their entire weekly income on cell phones and watches? Explain your answer using marginal analysis.                        I.          Suppose that this consumer’s income elasticity for watches is 5.4. what does this indicate about watches? If the cross-elasticity calculates to 0.8 what does this indicate about the relationship between watches and cell phones?

C(Q) = 100 + 20Q + 15Q² + 10Q³

Based on the cost function, determine:

       i.           The fixed cost of producing 10 units of outputs

     ii.           The variable cost of producing 10 unit of outputs

   iii.           The total cost of producing 10 unit of outputs

    iv.           The average fixed cost of producing 10 unit of outputs

      v.           The average variable cost of producing 10 unit of outputs

    vi.           The marginal cost when Q= 10 

raded Discussion

a) Prepare a table and line graph showing the unemployment and economic growth rate for a Caribbean country and a developed country (other than the US) for the last 5 years. Examine the relationship observed between the two countries.

b) Identify THREE public policies that can stimulate employment and facilitate economic growth in an economy.

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If a firm's demand function is p=100-q,what quantities need to be sold to bring in a total revenue of