Microeconomics Answers

Rick always likes to consume a cup of tea with a serving of noodles at any given time of the day. He earns a monthly allowance of 150. A cup of tea cost him Rs5 and serving of noodles cost Rs 10. Given this what will be Rick’s optimal consumption bundle?

How much economic profit a firm can earn in comitative environment?

In this statement correct that laizze faire purely capitalist economy will consistently give result in economically effective distribution of resources? if yes explain why?

Assume the following demand and cost function of a monopolistically

competitive firm:

P = 100 − 0.2Q

TC = 30Q − 5Q

2 + Q3

i. Determine the long run equilibrium price and output of a

monopolistically competitive firm.

ii. How is monopoly solution (price and output) different from that of

monopolistic competitive solution (price and output)?

iii. Find out the perfect competitive solution (price and output) and

compare the results with monopoly and monopolistically

competitive solution (price and output)

iv. Why do results vary from perfect competition to monopolistic

competition to monopoly?

Given C =

𝑥3

3

– 3x2 + 9x + 16 and R = 21x – x2, does the producer sell in a

monopolistic or a competitive market ? Find the output for maximum revenue. What

is the maximum value of R?

(i) Imagine that the wage rate (w) = 10 and cost of capital (r) = 0.1. Given this information, answer the following questions: (a) Find the slope of the isocost line. (b) What is the slope of the isoquant where it is tangent to this isocost line? (c) If the marginal product of labour used in production at this point is 50 pencils per hour, what is the marginal product of capital used

An average worker in Canada can produce 40 cars or fix 32 computer bugs. With the same resources, an average worker in India can produce 12 cars or fix 30 computer bugs.

_____ has an absolute advantage in producing cars, _____ has an absolute advantage in fixing computer bugs.