Microeconomics Answers

The Efficient Software Store had been selling a spreadsheet program at a rate of 100 per month and a graphics program at the rate of 50 per month. In September 2012, Efficient's supplier lowered the price for the spreadsheet program, and Efficient passed on the savings to customers by lowering its retail price from $400 to $350.The store manager then noticed that not only had sales of the spreadsheet program risen to 120, but also the sales of the graphics program increased to 56 per month. Explain what has happened. Use both arc price elasticity and arc cross-elasticity measures in your answer.

in short run equation TC=200+55q find fixed cost

1)   With regard to achievement of stability of equilibrium in an isolated market assume that the market for string beans is found to have a lagged supply response such that the demand and supply function may be written as

D_t = aP_t + b

S_t = AP _t-1 + B

Required: Derive the conditions for dynamic stability of equilibrium

1. Suppose that the demand for crude oil is given by Qd =85- 0.4P, where Qd is the quantity demanded in millions of barrels per day and P is the price per barrel in dollars. Suppose also that the supply of crude oil is given by Qs= 55 + 0.6P.

a) Calculate equilibrium price and quantity in this Market

b) Graph the demand curve and the supply curve

c) Calculate the demand for crude oil and the supply for crude oil if the market price is $ 15.00 per barrel. Explain your answer.

d) Calculate the demand for crude oil and the supply for crude oil if the market price is $50.00 per barrel. Explain your answer.

2. What type of relationship exists between the firm’s average physical product curve and the average cost curve in the short- run?

Why have Canadian house prices increased so quickly this year? And what is a possible solution to slow down house prices to make homes more affordable? Make sure to use concepts from our course in your explanation.

As the price of tickets rises from $200 to

$250, what is the price elasticity of demand

for (i) business travelers and (ii) vacationers?

(Use the midpoint method in your

calculations.)

b. Why might vacationers have a different

elasticity from business travelers?

a) describe the properties of Cobb Douglas production function with respect to return and scale.

b) Discuss the sources of risk and uncertainty in production of agricultural good

4, SANUMARC produces fingerlings for sell. The quantity x (kg) of these fingerlings demand each week is related to the wholesale unit price by the equation p=-0.006x+180

The weekly total cost incurred by SANUMARC for producing x kgs of fingerlings C(X)=0.000002x^3-0.02x^2+120x+6000

a) find the marginal cost function C

b) find the marginal revenue function R

c) find the marginal profit function P

d) Compute P (2000) and interpret the results

Given that we do not know the demand schedules, does the concept of consumer surplus have any practical relevance? Or do we have to make assumptions to generate the equation for the demand schedule and then compute the consumer surplus? If so, why not assume the value of the consumer surplus. Examine the sensitivity of the consumer surplus to changes in two of the factors that are assumed as given when computing the consumer surplus.

A firm wants to minimize cost when Q=160=2√KL ;r=4 k=2

a) write out the Lagrangian function

b) Find K* and L*

c).Is the second-order sufficient condition for minimum satisfied?

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of prices of crackers for soup at which they would both find trade advantageous?