Microeconomics Answers

Suppose that people derive utility from two goods—housing (H) and all other consumption goods (C).

a. Show a typical consumer’s allocation of his or her income between H and C.

b. Suppose that the government decides that the level of housing shown in part a (say, H*) is ‘‘substandard’’ and requires that all people buy H** > H* instead. Show that this law would reduce this person’s utility.

c. One way to return this person to the initial level of utility would be to give him or her extra income. On your graph, show how much extra income this would require.

d. Another way to return this person to his or her initial level of utility would be to provide a housing subsidy that reduces the price of hous- ing. On your graph, show this solution as well.

A. Critically evaluate whether DBN is fulfilling

its mandate?

B. In responding to global socioeconomic

development trends, what role in your view

should the DBN be playing?

Estimate the sales for 2022, 2023, 2024 and fit a linear regression equation and draw a trend line.

Years 2014 2015 2016 2017 2018 2019 2020 2021

Sales 22734 24731 31489 44690 51320 55330 65890 75800

second question

The demand for petrol rises from 500 to 600 Barrels when the price of a particular scooter is reduced from ETB 25,000 to ETB 22,000. Find out the cross elasticity of demand for the two. What is the nature of their relationship?

If good A and B are complements, an increase in the price of A, will result in

What will be the budget line if P1 doubles and P2 becomes 8 times larger and income becomes 3times larger

Qd = 600 -30P

Qs = -300 + 120P

 What is the equilibrium price

Draw a consumer budget constraint and indifference curves for Pepsi and Pizza. Find out

the optimal consumption choice when consumer has income of $2000 and the price of Pepsi is $5 per bottle and the price of per pizza is $10.What is the marginal rate of substitution at this optimum?

Discuss the effectiveness of fiscal and monetary policies in regulating economic activities in a country.

The determination of the probability and impact of the identified risks and opportunities is referred to as risk ......

1 identification

2 analysis

3 evaluation

4 review

The concept of entry barriers was pioneered by Bain in 1956. He defined a barrier to

entry as anything which places potential entrants at a competitive disadvantage

compared with established firms, so that established firms are able to earn abnormal

profits over the long run.

Pick any TWO (2) of Bain’s entry barriers and discuss how each applies to any South

African industry of choice.