Microeconomics Answers

plot the supply and demand curve Qd= 3000-10P Qs=-10000 + 10P

Economists assume that a consumer is expected to make rational decisions but not functional. As a consumer of Rice (Bundle A) and pizza food (Bundle B), *discuss* how you might apply economic reasoning in making your decisions rationally. What problems can arise when you make functional decision(s)?

Q 5: Suppose technological advances have reduced the cost of Hard drive. Explain its effect on the supply for computers? Also illustrate the effect of change in supply on the equilibrium price and quantity of computer? 

Q 3: identify whether the demand curve will shift leftward or rightward.

a) An increase in income (the good under consideration is an inferior good)

b) A rise in the price of a complementary good

c) A fall in the price of a substitute good

 d) A rise in the number of buyers

Economists assume that a consumer is expected to make rational decisions but not functional. As a consumer of Rice (Bundle A) and pizza food (Bundle B), *discuss* how you might apply economic reasoning in making your decisions rationally. What problems can arise when you make functional decision(s)?

Given the following Demand and supply function: Q_{d = 12 - P} and Q_{s = 8.4 + 0.5P} , 

then answer the following questions.  

i. Calculate the market clearing price and quantity. 

ii. Determine, whether surplus or shortage exist at price level of 2 birr and 3 Birr. 

iii. Compute price elasticity of demand and supply at equilibrium level of price and 

quantity 

iv. Determine the nature of price elasticity of demand and supply and interpret the result.  

plot the supply and demand curve Qd= 3000-10P Qs=-10000 + 10P

You are an analyst employed by a yacht manufacturer that last year sold 30,000 luxury yachts at $500,000 each. Your market research indicates that:

i) the price elasticity of demand for your aircrafts in −0.5. (or +0.5 in absolute value); 

ii) the income elasticity of demand for your aircrafts is +2.6; and 

iii) the cross price elasticity for your aircrafts with respect to the price of a comparable jet manufactured by a competitor is +1.4. 

 Now suppose that the only change you expect is a 6% increase in the price of your aircraft. Estimate sales this year and discuss the impact on total revenues. (5 MARKS)

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The market supply curve is the horizontal sum of all the individual supply curves.

Explain why equalizing the marginal utilities of all good does not maximize utility. Explain why equalizing the marginal utility per pound spent on each good does maximize utility.