Microeconomics Answers

Suppose the following demand and supply function:

Q^d = 750 – 25P

Q^s = -300 + 20 P

       i.           Find equilibrium price and quantity

Find consumer and producer surplus

A competitive firm's short-run supply curve is part of which of the following curves?

• A. Marginal revenue
• B. Average variable cost
• C. Average total cost
• D. Marginal cost

If a firm in a perfectly competitive market doubles the number of units of output sold, then total revenue will

• A. more than double.
• B. exactly double.
• C. remain constant.
• D. less than double.

in 2019 fiscal year estimated that Ghanaians saved 20 percent of their disposable income; however, due to overconsumption in the previous year, autonomous saving for 2019 was negative 100 million Ghana cedis. The government of Ghana imposed a lump sum tax of Gh ₡ 20 million. In addition to the lump sum tax the government also took 20 percent of all incomesearned in the economy in the form of proportional tax. The total government expenditure was GH ₡50 million in 2019. Total investment recorded for 2019 was 66 million. 

(A) Determine the tax function for this economy.

(B) Derive the consumption function based on the above information

(C) Write out the aggregate demand equation

(E) Determine the equilibrium consumption

(F) Calculate the value of the government expenditure multiplier for this economy and interpret your result

(G) Calculate the total tax revenue to the government

Are apple relatively elastic or inelastic?

Identify the three stage of production in table form and graphically.labor= 0 1 2 3 4 5 6 7 8&total product= 0 3 7 12 16 18 19 19 16.when the law of diminishing marginal return does start to operatу?

Mr Banda faces the following utility function from consuming nshima [X] and Rice [Y] 𝑈 = 3𝑋𝑌 1 3 Mr Banda’s budget allocation for nshima and rice is K240. The price of nshima is K60 per Kg while that of Rice is K20 per Kg. A. How much nshima and rice should Mr. Banda consume to maximize his utility? B. What is the total utility at the optimum? [4 Marks] C. What is the Lagrange multiplier? D. What will be the increase in utility when the budget allocation is increased to K241?

Suppose that it costs $40,000/yr to get an MBA degree and that non MBAs expect to earn $60,000/yr while MBAs earn $80,000/yr. Assuming an MBA takes two years to finish and that all other costs are negligible, are wages and tuitions in equilibrium (i.e. would your average person strictly prefer one activity (getting an MBA) over another activity (not getting an MBA?). If not, how will markets adjust?

Suppose there are lemon (used) cars worth every price from ZMW1,000 to ZMW3000 to new owners, with each price equally likely. Further you expect that a car worth X to a new owner is worth 0.75X to its current owner. Suppose that there is a finite supply of cars at each price, while there is a much larger number of potential buyers (so the equilibrium price is the valuation of the potential buyer). Lastly assume that the quality of the car is unknown to potential buyers, due to information asymmetry.

(a) Calculate the equilibrium price and average quality of cars sold.

(b) Which cars are sold and which ones are not?

(c) Is the equilibrium efficient?

QUESTION FOUR

4) Suppose that you have the following demand curve. 

Q = 400 – 6P + 0.0051

Where

Q = quantity demanded,

P = price, and

I = average income. 

You know that the current market price is ZMW20 and average income is ZMW20,000

a)                Calculate current demand.

b)                Calculate the price elasticity of demand. 

c)                Calculate the income elasticity of demand.