Microeconomics Answers

he fisherman has a fixed cost of Rs.10 (his rod). The variable cost of his time is Rs.5 per hour. Graph the fisherman's total-cost curve. Is this cost function exhibits the concepts of economic cost theory? If not, then why not?

Sandra lives in Anuradhapura and runs a business that sells mangos. In an average year, she receives Rs.3.6 million from sales of mangos. Of this sales revenue, she must pay the production and wholesale cost of Rs. 1,400,000. She also pays wages and utility bills totalling Rs. 1,100,000. If she does not operate this mango business, she can work in an accounting firm and receive a monthly salary of Rs. 70,000. She owns her showroom. If she chooses to rent it out, she will receive Rs. 5,000 in rent per month. Assume that the value of this showroom does not depreciate during the year. To commence the business, she has released Rs.1 million from her fixed deposit. The annual interest rate for her fixed deposit is 18%. No other costs are incurred in running this mango business. What is Sandra’s accounting profit (used for tax purposes)? What is her economic profit

What is consumer’s equilibrium? Explain the income effect in the consumer’s equilibrium

in normal and inferior good

compute the maximum revenue combinations of products using the maximum revenue criterion (, )

The following production function has been estimated for wheat:

W = 4 F^(0.5). L^(0.25)

where, W = Wheat yield (kg/ha), F = Fertiliser (kg/ha) and L = Labour (hours/ha)

A) If the wheat producer has a budget of R9 000 to spend on fertiliser and labour, how much of each input should he use and what is the quantity of wheat he will produce? [4]

B) Derive expressions for the value of marginal product (VMP) of fertiliser and labour given that wheat sells at R72 per kg.

Namibia’s small population of about 2.3 million is a curse rather than a blessing”. Use the

arguments of the neoclassical economic theory to discuss this statement.