Microeconomics Answers

True or false

1 When the factors are independent, a change in the quantity of one factor has no effect on the MPP of the other.

2  When VMPL equals the wage rate, the VMPL curve and the demand curve for labor are identical.

3   Collusion enables the member firms to be competitive in the effort to maximize the industry's profit.

4  Under oligopoly, if only one firm is sophisticated, it becomes a leader.

5  In the Bertrand’s model equilibrium is attached when market price is greater that MC for homogenous good.

Qd= 20 - 2P

Qs= 10 + 3P

a. Determine the equilibrium price and quantity.

b. Calculate the point price elasticity of demand at equilibrium

C. Calculate the point price elasticity of supply at equilibrium

d. Suppose an indirect tax of $10 per unit is imposed on this commodity, find the now equilibrium price and quantity of the product.

Turnips are an inferior good. A rise in the price of​ turnips, all other factors remaining the​ same,

Question content area bottom

Part 1

A.

increases the supply of turnips.

B.

increases the quantity demanded of turnips.

Your answer is not correct.

C.

increases the quantity supplied of turnips.

This is the correct answer.

D.

decreases the quantity supplied of turnips.

E.

decreases the demand for turnips.

If a firm’s cost function is C(q) = 65 + 35q + q2.

What level of output, q, should it choose to maximize its profit if the market price is p? How much

does it produce and what is its revenue, cost of production, and profit if p = 215 dinars?

The market demand and supply functions for potatoes are: QD = 2,000 - 500P and QS = 800 + 100P. To help potato producers, the government is considering legislation that would put a price floor at R2.25 per bag. If this price floor is implemented, determine (i) how many bags of potatoes will the government be forced to buy to keep the price at R2.25; (ii) how much government will spend in total; and (iii) how much producer- and consumer -surplus changes

Use the following two equations: QS = 972 + 103.5P QD = 1722 – 141.5P A- Calculate the equilibrium price and the equilibrium quantity. Show all your work. B- Using the above two equations to find the values of Qd, Qs, the market situation (Shortage/Surplus/Equilibrium), and the Value of shortage or surplus if any, at the following prices: 3.044, 3.65, 3.88, and 3.95. C- If the consumer income increases by 40%, what will happen to the equilibrium price and quantity.

What is the relationship between equity and efficiency ?

Consider the market for coconuts in a small island nation. The domestic demand curve (in cedis) is P = 140 – 4QD and the domestic supply curve is P = 20 + 2QS.

a. What is the market equilibrium price and quantity?

b. If the government, hoping to help poor consumers, imposes a price ceiling of $40, what will be the shortage of coconuts in the market? Graph your response.

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