Microeconomics Answers

Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function: C(q)=4q, where q represents quantity produced by the firm. The market inverse demand function is given byr P(Q)=24-2Q, where Q represents total industry output. Based on the given information answer the following.

1. What price will the firm charge? What quantity of energy drinks will the firm sell?

2. Now suppose a second firm enters the market. The second firm has an identical cost function. What will be the Cournot equilibrium output for each firm?

3. Whay is the Stackelberg equilibrium output for each firm of firm 2 enters second?

4. How much profit will each firm make in yhe Cournot game? How much in Stackelberg?

5. Which type of market do consumers prefer: monopoly, Cournot duopoly or Stackelberg duopoly?

The demand function for pie is QD=600-4PA-0.03M-12PB+15T+ 6PE+1.5M QD is quantity demanded of good pie each month,PA is price of pie,M is buyers income,PB is price of related good coke,T is buyers taste index,PE is price buyers expect to pay next month for good A and N is number of buyers in the market for pie. i.Interpret the intercept parameter in the demand function. ii.What is the value of the slope parameter for the price of pie? Does it have the correct algebraic sign?iii.Interpret the slope parameter for income. Is pie normal or inferior? iv.Are pie and coke substitutes or compliments? Interpret the slope parameter for the price of coke. v.Are the algebraic signs on the slope parameters for T, PE, and N correct. vi.Calculate the quantity demanded of pie when PA=$5, M=$25,000, PB $40, T=6.5, PE=05.25, and N=2,000. vii.Calculate the income elasticity of demand from (vi)above and interpret your results.                 

Assume an area is composed exclusively of apartments and populated by low-income residents. The people live in that area because (1) they cannot afford to live in other areas of the city, (2) they prefer to live with people of their own ethnic group, or (3) there is discrimination against them in other areas of the city. Rents paid are a very high percent of peoples' incomes.

i. Would the demand for apartments be relatively inelastic or relatively elastic? State why. ii. Would the supply of apartments in this area be relatively inelastic or relatively elastic? State why. iii. Draw the demand and supply curves, showing the first equilibrium price and quantity. iv. Assume the state creates a rent supplement program where the renter is required to pay 30% Of income in rent. Any more rent is paid by the state to a limit. If the rent is C500, the other C200 would be paid by the state. Analyze the results and Show the changes on the graph. Who gains and who loses from this program?

In an article about the financial problems of Daily Graphic, an economists at Valley View University indicated that the company was losing about GHC20 million a year. The economist suggest that, paper should raise its price from GHC2.5 to GHC3.5 which he estimated would bring in an additional GHC65 million a year. The paper's publisher rejected the idea, saying that the circulation could drop sharply after a price increase, citing The Ghanaian Times experience after it increase its price to GHC3. What implicit assumption are the publisher and the economist making about demand elasticity? 

Price controls policy from the state has led to higher spending by consumers and sharply rising prices for goods that weren't subject to price controls. The result was a big increase in demand for price-controlled goods. The state is accusing food producers, wholesalers and grocers of profiteering, threatening to seize control of supermarkets if they did not make more food available; and has instituted rationing. Predictably, "a black market developed among street vendors."

Required:

i. What is price control? With the aid of a diagram tell what type of price control the state adopted. ii. Give two reasons for price control policy. iii. Give three effects Of price control policy. why did the state threatened supermarkets? iv. Why did the policy lead to higher spending? v. Is the state justified in accusing the producers, wholesalers and grocers Of profiteering? vi. What should state do to solve the issue? vii. Is this policy "good"? viii. Three benefits of studying microeconomics

Saeed’s Bakery has a fire and Saeed loses some of his cost data. The bits of paper that he recovers after the fire provide the information in the following table (all the cost numbers are Rupees).

Q

AFC

AVC

ATC

 MC

25

300

250

550

200

50

A

B

375

225

75

100

225

325

325

100

75

C

D

E

125

60

270

330

Saeed asks you to come to his rescue and provide the missing data in the five spaces identified as A, B, C, D, and E.

what all factors influence demand of tourism in haryana ?

In a factory of fixed size, Lindani is able to produce 1 500 wooden toy trucks per day when he employs 2 workers, 2 500 wooden toy trucks per day when he employs 3 workers and 3 200 wooden toy trucks per day when he employs 4 workers. When Lindani employs 5 workers, he can produce __________ wooden toy trucks per day.

[1] 3 800

[2] 5 700

[3] 6 400

[4] 7 200