Microeconomics Answers

Evaluate with the aid of a diagram whether the government should intervene when a negative externality occurs. What could the government do to promote allocative efficiency?

Distinguish between different categories of positive and negative externalities.

Discuss your observation x-TR-TC

(Question 1) Demonstrate the profit levels, for market with discrimination and market without discrimination.

(Question 2) Give brief but succent conceptual discussion on welfare theory and resource allocation.

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The following table shows the total utility gained from the consumption ofFanta Lemon in a week.left is quantity and right is total utility1-202-353-454-535-586-587-48
1. Calculate the marginal utility. What do you observe?2. Sketch the total utility and marginal utility curves.3. If the price of Fanta Lemon increases from Rs.8 to Rs.10, how will itaffect its consumption?Explain your answer using the data above.

suppose that your demand schedule for pizza is as follows

price: $8,$10,$12,$14,$16

quantity demanded( income $16.000): 40,32,24,16,8

quantity demanded( income $20.000): 50,45,30,20,12

a. use the midpoint method to calculate your price elasticity of demand as the price of pizza increases from $8 to $10 if (i) your income is $16,000 and (ii) your income is $20,000.

b. calculate your income elasticity of demand as your income increases from $16,000 to $20,000 if (i) the price is $12 and (ii) the price is $16

Output of good X Short run average costs (AVC) Average Revenue (AR)

1 110 300

2 95 250

3 80 210

4 75 180

5 82 150

6 85 120

7 90 100

8 100 90

9 110 80

10 120 70

Given the table above, calculate Total Variable costs (TVC), Total Costs (TC), Marginal costs (MC, Marginal revenue (MR) and profit (loss) at each level of output.determine the profit maximizing level of output. Calculate the smallest rise in TVC that would force the firm to cease production in the short run.distinguish between the short run and long run periods of production.

Compare and contrast features of perfectly competitive market with monopolistic competition. Explain the terms Productive efficiency and allocative efficiency with reference to monopolistic completion

Suppose the wool industry is perfectly competitive. Draw 6 diagrams showing the equilibrium positions of a competitive firm in the short run and in the long-run.i)Assuming that a single firm is enjoying abnormal profits, draw another diagram to show the effects of the development of artificial fibres that reduces the demand for wool on the firm’s equilibrium position.

Airbus makes 50 planes a year, which sell for $50 million each. If Airbus raises its price, Boeing will leave its prices unaltered, so Airbus loses market share. It faces an elastic demand curve. However, if Airbus cuts its price below $50 million, Boeing is forced to match the price cut, so quantity demanded increases only to the extent that additional plane orders are placed when planes are cheaper. Each company faces inelastic demand when it cuts the price. Draw the demand curve that Airbus thinks it faces.