Microeconomics Answers

An individual spends his income on three goods.  He buys 550 units of X at $1 per units,425 units of Y at $2 per month units, and 200 units of Z at $3 per unit.  He now buys 440 units of Y and 190 units of Z.  Calculate his price elasticity of demand for X. 

Suppose Lionel Messi was making the choice of how many hours to practice. Messi knows that there is a positive relationship between the number of hours he practices and the number of goals he scores in a season at Barcelona. Numbers in the table below denote combinations of free time and goals for Lionel Messi, given his preferences of goals vs free time is known and his ability is unchanged within the season. There are no lucky goals, his productivity only depends on the number of hours he practices.

X Y Z

Free Time 12 21 18

Goals 95 41 68

MRT 3 9 6

MRS 25 4 6 

At point X, will Messi want to increase his consumption of free time or reduce it? Why? 

At point Y, will Messi want to increase his consumption of free time or reduce it? Why? 

At point Z, will Messi want to increase his consumption of free time or reduce it?

Why? 

In less than 800 words, explain how Thomas Piketty relates the return on capital (r) to the rate of economic growth (g) in the context of inequality. 

For each of the scenarios below comment on whether the setting can be termed as a capitalist system. If yes why, If not why not? If you think that It does not represent capitalism say how it can be modified to make It Into capitalism:

a) In the Arumbaya tribe hunters leave in the morning to find food. At the end of the day, they return with their catch and leave it all in a pile outside the village. Tribe members can come and take what they need.

b) An influencer on social media hires people to develop content for her YouTube channel. Now she provides social media solutions to various businesses.

c) The Maghrebi were an important Jewish trading community in the Mediterranean. They used to trade through overseas agents who could be trusted as they all belonged to the same community. A cheater would never be employed as an agent again. 

Suppose a soap-manufacturing production process is described by the following equation:

Y = a + b log K + с log L

Where,

Y= Output (number of soaps produced) K=Capital

L=Labor

a, b and c are constants

Suppose 0<a<1, 0< b<1 and 0<c<1

1. Find the Marginal Product of Labor (MPL) and Marginal Product of Capital (MPK) in the production of soap
2. Is MPL diminishing, increasing or constant as L increases?
3. Is MPK diminishing, increasing or constant as K increases?