Microeconomics Answers

1. Suppose that P = 50 - QD and P = QS are the market demand and supply functions for paper. (Please show your calculation and diagram in the space provided. No point will be awarded to answers without proper calculation.) (5’)

1) Show market demand (D) and market supply (S) curves graphically and calculate the market equilibrium. (3’)

Explain Demand curve

General instructions:

✓ Discuss the following points as much as possible.

✓ Each questions should be answered.

✓ Attempt all questions, size of the work 5-10 pages.

Submitted date:- Tus, Aug 15

Questions

 1. Show by using graph the factors which can able to affect the equilibrium conditions and explain how the government can able to inverse in the market?

2. In the market the inverse demand function given as P=200-1/6Qd and P=100+1/2Qs

If in the market there are 200 identified by years and 100 supplies based on the information: 

A. Calculate Pe and Qe

B. Calculate Ped and Pes 

C. When price increases in the market what will happen for TR

D. When the price value fixed in the market at $16

√ what will happen

√ whose problem do it

√ how it will be managed

√ number of demand and supply

3. Explain by using the graph the relation between TPI, API, MPI and stages of SR production?

4. Show price equilibrium and quantity of the demand and supply function?

Total revenue is the product of price and quantity. Whether total revenue rises or falls depends on increase or decrease in price with their respective elasticities. You are required to find what happened to total revenue on each situation given below with help of graph? i. Effects of price increase on a product with inelastic demand. ii. Effects of price increase on a product with elastic demand. iii. Effect of price cut on a product with elastic demand. iv. Effect of price cut on a product with inelastic demand.  

Equilibrium is achieved when quantity demanded intersect with quantity supplied. Assume a product “Y” for which supply and demand shifts. You are required to prepare graphs of each situation given below? i. Increase in income: Y is a normal good. ii. Increase in income: Y is an inferior good. iii. Decrease in the price of a substitute for Y. iv. Decrease in the price of a complement for Y. v. Increase in the cost of production of Y.  

Give an example of a price ceiling and an example of

a price floor.

A consumer has #300 to spend on goods X and Y. The market prices of these two goods are Px = #15 and Py = #5. 

a. What is the market rate of substitution between goods X and Y? 

b. Illustrate the consumers opportunity set in a carefully labelled diagram. c. Show how the consumers opportunity set changes if income increases by #300. How does the #300 increase in income alter the market rate of substitution between goods X and Y?

Suppose that the following events occur one at a time: 

The price of crude oil rises. 

The price of a car rises. 

All speed limits on highways are abolished. 

Robot technology cuts car production costs. 

Which of these events will increase or decrease (state which): 

The demand for petrol? 

The supply of petrol? 

The quantity of petrol demanded? 

The quantity of petrol supplied?