Microeconomics Answers

What makes demand curve more elastic

1. The production possibilities curve below show the hypothetical relationship between the production of food and clothing in an economy.

Combination Food Clothing

A 0 4

B 7 3

C 13 2

D 18 1

E 22 0

(a) What is the marginal opportunity cost of producing the second unit of clothing?

(b) What is the total opportunity cost of producing the second unit of clothing?

(c) What is the marginal opportunity cost of producing the third unit of clothing?

(d) What is the total opportunity cost of producing the third unit of clothing?

Given the following cost function: C(q) = - 8+30q+5, find AC

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

Suppose the market for corn in Ghana is described by the following demand and supply equations:

Demand: P = 100 – (1/2)Q

Supply: P = 10 + (13/10)Q.

Where, P is price(₵/bag); and, Q is quantity(bags). Use this information to answer the

following questions.

a. What is the equilibrium price and quantity of corn in this market? (5 marks)

b. Plot the demand and supply of corn and show the intercept values, equilibrium quantity

and price. (10 marks)

c. What is the total revenue derived in this market? (5 marks)

d. Suppose the government institutes a price support of ₵80 per bag of corn.

i. How many bags of corn should the government buy to maintain this price? (5 marks)

ii. What is the cost of this program to government if storage costs is ₵10 perbag? 

• At what price should a firm produce to maximise profits in a perfectly competitive market? A. where price equals total revenue
•  B. where price equals average revenue
•  C. where price equals marginal revenue
•  D. where price equals marginal cost

Apart from the mismatches of supply and demand in the labour market, what other factors are largely contributing to inequality levels within the country? 

Simplify the following, using the rules of exponents

i) x9. x8

ii) x5 . x-9

iii) x-11. x

iv) x6 . x0.15

v)𝑥5/𝑥−3

vi)𝑥−4/𝑥−7

vii)𝑥−3/𝑥−4

viii)𝑥9/√𝑥

ix) (𝑥−4)−5

x) (𝑥−0.4)−2

xi)1/𝑥−1.5. 1/𝑦−2.5

xii)𝑥−3.5/𝑦−2.2