Microeconomics Answers

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?

1.The demand for some goods is set by formula Qd = 200-10Р, the supply is presented by the formula Qs = 60+15P 1) Compute the equilibrium price and quantity of goods at this market; 2) If a market price is fixed as Р = 10rub., calculate the demand and supply amount.

Suppose M = 8, P1 = 4, P2 = 2. Graph the budget set for this consumer.

b) Define the opportunity cost of good 1 in terms of good 2.

c) Determine the opportunity cost of good 1 at the point where 21 = 1.

d) Does the opportunity cost of 1 change as we move along the budget line? Explain.

e) Now suppose that M = 16, P1 = 2, P2 = 4. Graph the consumer's budget set in this case

f) Can we rank these budget sets in terms of which is better for the consumer? Explain.

Given two goods named Omega & Alpha, with Omega along the vertical axis, and Alpha on the

horizontal. Assume that the budget is constant at 100 pesos, the price of good Omega is fixed at 5

pesos. The Price of Alpha changes from 1 peso to 2 pesos. What is the MRS at the old price of

Alpha?