Microeconomics Answers

You are the manager of a monopoly. A typical consumer’s inverse demand function for your firm’s product is 𝑃 = 250 − 4𝑄 and your cost function is 𝐶(𝑄) = 10𝑄. a) Determine the profit-maximizing quantity, and price under standard monopoly pricing. b) Determine the optimal two-part pricing strategy. c) Suppose you want to use block pricing strategy. How many units should you put in a block and what price you should charge for the block? d) Compare your profits from parts (a), (b) and (c)

According to the equation Q​ = 0.38​P, where Q is the quantity supplied and P is the price of the good measured in​ dollars, the

A.

quantity supplied rises by 38 units as the price increases by​ $1.

B.

quantity supplied rises by 38 percent of the price increase.

C.

the number of units supplied rises by 3.8 percent as the price increases by​ $1.

D.

quantity supplied falls by 0.38 units as the price increases by​ $1

E.

slope of the supply curve equals 38.

According to the equation Q​ = 16 ​+ 0.2P​, where Q is the quantity supplied and P is the price of the good measured in​ dollars, the

A.

quantity supplied equals 20 percent of the price.

B.

quantity supplied rises by 16 units as the price increases by​ $1.

C.

quantity supplied rises by 0.2 units as the price increases by​ $1.

D.

quantity supplied rises by 3.2 units as the price increases by​ $1.

E.

slope of the supply curve equals 16.

Suppose ABC Corp. spends ​$200,000 per year on some basic level of​ advertising, regardless of its revenues. In​ addition, the company spends 35 percent of each dollar of revenue on extra advertising. Write a mathematical equation that describes the functional relation between advertising​ (A) and revenue​ (R).

A=

(Enter your response as an​ expression.)

.The price for a good A has risen from 175 rub. to 210 rub. The demand for a good B has increased from 5400 units to 7100 units. Calculate the cross- price elasticity of demand? 

In the long run scenario why is a perfectly competitive market considered to be more

efficient than a monopolistic competition market when firms in both the markets make

normal profits in the long run? Use graphical illustrations to explain your answer.

Do you consider concentration in banking a positive?

Suppose the production function of a firm is given as 1/ 2 1/ 2 X  0.5L K prices of labor and capital is given as $ 5 and $ 10 respectively, and the firm has a constant cost outlay of $ 600.Find the combination of labor and capital that maximizes the firm’s output

6. In the market for millet, the demand curve is Q=50-3P and the supply curve is Q=2P. The government decides to raise revenue by taxing consumers $5/3 for every bag of millet purchased. The price is measured in cedi per bag; and, quantity is in 'number of bags'. Use this information to answer questions 6(a) to 6(d).

a) Graph the supply and demand curves and indicate the deadweight loss, tax revenue, consumer and producer surplus while the tax policy is in place. 

b) How much tax revenue is this policy going to generate for government?

c) What proportion of the tax is paid by consumers?

d) Calculate the deadweight loss due to the tax policy.

5.Suppose that your demand schedule for compact discs is as follows: Price Quantity demanded, income 10 000 rub. Quantity demanded, income 12 000 rub. 8 40 60 10 36 42 12 24 30 14 16 20 16 6 10 a. Calculate your price elasticity of demand as the price of compact discs increases from 8 to 10 if your income is 10 000, and your income is 12 000. b. Calculate your income elasticity of demand as your income increases from 10 000 to 12 000 if the price is 12, and the price is16. 6.The price for a good A has risen from 175 rub. to 210 rub. The demand for a good B has increased from 5400 units to 7100 units. Calculate the cross- price elasticity of demand?