Microeconomics Answers

If the government puts a $2 excise tax on a product and as a result, price rises by $1.75, how much will the seller or buyer pay??

Explain, with the aid of a graph, what will happen to the exchange rate between the rand and the dollar if more South African residents purchase shares in American companies. Also comment on the impact on the equilibrium quantity of dollars.

Two former Northwest University students work in investment banks with salaries of 560,000 each for 2 years after they graduate. together they saved s50,000. after 2 years, they decided to quit their job and start a website designing business. they used the 50,000 to buy computer equipment, tables and chairs. for the next 2 years, they earn s40,000 annually, pay themselves s10,000 annually, and rent an office for s18,000 per year,. Prior to the investment, their S50,000 was in bonds with 10 percent interest. are they now getting economic benefits? explain your answer

Consider a firm that uses capital and labor as inputs and sells 5,000 units of output per year at the prevailing market price s10. also assumes that the total labor cost for the firm is s45,000 per year. further assume that the company's total capital stock is currently worth 100,000, that the return available to investors with comparable risk is 10 percent per year, and that there is no depreciation. is this a profitable company? explain your answer

define diminishing returns

Consider how health insurance affects the quantity of healthcare services performed. Suppose that the typical medical procedure has a cost of $100, yet a person with health insurance pays only $20 out of pocket. Her insurance company pays the remaining $80. (The insurance company recoups the $80 through premiums, but the premium a person pays does not depend on how many procedures that person chooses to undertake.)

b. On your diagram, show the quantity of procedures demanded if consumers pay only $20 per procedure. If the cost of each procedure to society is truly $100, and if individuals have health insurance as described above, will the number of procedures performed maximize total surplus? Explain.

c. Economists often blame the health insurance system for excessive use of medical care. Given your analysis, why might the use of care be viewed as “excessive”?

d. What sort of policies might prevent this excessive use?

Question 4 (ILOs: B1, B3, C3, D4)

Batelco company estimates that the demand for their products is

Q = 500 - 3P + 2Pr + 0.1Y

Where Q = quantity, Pr is the price of its rivals, and Y is income (currently, P = $10, Pr = $20, and Y = $6000)

a.    What is the price of elasticity of demand for Batelco?

b.    What is the income elasticity of demand for Batelco?

c.     What is the cross-price elasticity of demand between its products and its revival?

d.    What is the implicit assumption regarding the population in the market?