Microeconomics Answers

Which of the following statements is incorrect?

A. There are many examples of oligopolistic industries in South Africa.

B. Oligopolistic operate completely independent each other.

C. One of the key features of oligopoly is uncertainty.

D. In an oligopolistic industry each firm must act strategically.

E. One of the possible strategies that oligopolistic have, is to collude.

1. If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to stay the same and the equilibrium quantity to fall. Illustrate with a graph.
2. Briefly discuss how greater consumption of a good affect utility

Rakhi likes to consume only two commodities X and Y, and nothing else. Both the commodities give her positive utilities, thereby giving rise to her preferences being wellbehaved and convex. However, she treats commodity X as an inferior good. Suppose Rakhi earns an income of 1000 per month and the ongoing prices of commodities X and Y are 20 and 10, respectively. a) Show, with the help of a diagram, what will happen to her optimal consumption of commodity X, in each of the following circumstances: i. Situation A: Price of X falls to 10, while everything else remains the same. (1.5 marks) ii. Situation B: Her income increases to 2000, while prices remain the same. (1.5 marks) b) What can you say about the demand curve for commodity X that Rakhi’s choice behavior would produce? Elaborate. (2 marks) Use diagrams to support your answers.

a) With an increase in the r-factor of the Coronavirus, people are extremely worried and are anticipating a lockdown in their city. Hence, they have started buying some of the staples and dry ration like wheat, rice, pulses, noodles etc. in bulk. What kind of impact this development will have on the market of food and related products, discuss with the help of a diagram?  b) Gradually, the suppliers of food and related products internalized the fact and made bulk orders of the items, so that they can continue to cater this sudden unexpected increase in demand. How will this new development impact the market of food and related products, discuss with the help of a diagram? 

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? (1.5 marks) 2) Next, the price of a serving oof noodles has fallen to Rs9 while the price of tea has gone up to Rs6. How will it impact the choice of Rick? (1.5 marks) 3) Finally, consider instead, that the price of Noodles has fallen to Rs8 while the price of a cup of tea is constant at Rs 5, how will the choice be impacted in this case? Discuss the income and substitution effect in this case. (2 marks) Use diagrams to support your answers

Assume that you are an entrepreneur of a hotel what are the pics and variable costs to carried out in that business

Suppose the price ratio of two goods is 3/4 and Shubman, another student in college has a budget of $100. If the price of good X increases from 6 to 12, what is the new price

ratio? Show your work

What are the three approaches to measuring economic

activity? Why do they givethe answer

Let’s consider following choices that a policy maker face between the policy platforms – (3marks) i. A – (0, 250) ; B (250, 0) ; C (250, 350) - Discuss and compare the policy choices that policy maker is facing. Can you advocate any one of them over the other? Give reasons in support of your answer. ii. X – (0, 500) ; Y (500, 0) ; Z (700, 0) – Discuss and compare the policy choices that policy maker is facing. Can you advocate any one of them over the other? Give reasons in support of your answer. iii. If the policy maker is utilitarian, then combining the policy options of part i. and ii., what should have been the chosen policy? Explain your answer.

the Almighty offered Bruce to become as powerful as the Almighty himself, giving Bruce the right to make decisions about not only for his own life but also giving him the power to choose outcomes for the rest of the world. Considering that there are more than 2 individuals in this world including Bruce, the Almighty asked Bruce to choose amongst the following states of the world - one, where Bruce is the only person who is better off by 100 units, while everyone in the world is worse off and are getting an allocation of 10 (call this state of the world as ‘self-interest’); two, where everyone in the world is better off and each one of the individual is getting 100, except Bruce who has been made worse-off and is getting an allocation of 10 (call this state of the world as ‘philanthropy’). Bruce chose latter over former. Comment over the entire situation that Bruce is facing. Also, comment over Bruce’s choice and giver reasons explaining the rationale behind that choice.