Microeconomics Answers

ASSUME THAT YOUR ARE FROM ANY ONE THE FOLLOWING FAMILY. How. Can u utilize the limited resources to fulfill the needs

Petty Shopper

Assume that your are from any one of the following family how can you utilise the limited resources to fulfill your needs

Farmers

Petty shoper

Flowers vender

Think about a single fast-food restaurant location and a commercial airline flying out of a single airport. If quantity is represented by the number of customers served, which business has the larger economies of scale? What does this mean for the number of firms and competitiveness of these industries?

A recent study found that the demand and

supply schedules for Frisbees are as follows:

Price per Quantity Quantity

Frisbee Demanded Supplied

$11 1 million Frisbees 15 million Frisbees

10 2 12

9 4 9

8 6 6

7 8 3

6 10 1

a. What are the equilibrium price and quantity

of Frisbees?

b. Frisbee manufacturers persuade the government

that Frisbee production improves

scientists’ understanding of aerodynamics

and thus is important for national security. A

concerned Congress votes to impose a price

floor $2 above the equilibrium price. What is

the new market price? How many Frisbees

are sold?

c. Irate college students march on Washington

and demand a reduction in the price of

Frisbees. An even more concerned Congress

votes to repeal the price floor and impose a

price ceiling $1 below the former price floor.

What is the new market price? How many

Frisbees are sold?

The government has decided that the freemarket

price of cheese is too low.

a. Suppose the government imposes a binding

price floor in the cheese market. Draw

a supply-and-demand diagram to show the

effect of this policy on the price of cheese and

the quantity of cheese sold. Is there a shortage

or surplus of cheese?

b. Farmers complain that the price floor has

reduced their total revenue. Is this possible?

Explain.

c. In response to farmers’ complaints, the government

agrees to purchase all the surplus

cheese at the price floor. Compared to the

basic price floor, who benefits from this new

policy? Who loses

suppose a consumer consuming two comodities X and Y has the following utility function U=X^0.4Y^0.6. if the price of good X and Y are 2 and 3 respectively and the income constraint is birr 50. find the quantities of X anf Y which maximize utility