Microeconomics Answers

The Long-run production function is given by; Y = 180 L1.2 K1.8

Where, Y = Output (mt/day), L = Labour (hours/mt) K = Capita (Rs/mt)

a) Calculate Marginal Product of Labour (MPL) and Marginal Product of Capital (MPK), if L=12 and K=20

b) Derive the equation for Isoquent and graphically show it by assuming L= 10, 15, 20 25 and 30.

c) Determine factor intensity and returns to scale of this production function.

d) Prove that the elasticity of labour is 1.2 and elasticity of capital is 1.8

Suppose the inverse demand for a monopolist’s product is given by P = 70-0.5Q. The monopolist can produce output in two plants. The marginal coat of producing in plant 1 is MC1 = 3Q1 and the marginal cost of producing in plant 2 is MC2 = Q2. How much output should be produce in each plat to maximize profit? And what price should be charged?

Compare to perfect competition, monopolist charged higher price and supply less quantity with long run firm equilibrium. Discuss using suitable graph.

Explain the deadweight loss of monopolization

suppose that the demand function or schedule is given by the linear equation p = 300 - qd and the supply equation by p =60 + 2 qs (a) find the equilibrium price and quantity (b) suppose the supply curve slop prices from 2 qs to 3 qs (C) find the new equilibrium price and quantity (d) find the equilibrium position graphically?

Suppose the market for almonds is in equilibrium. Consumers are expecting that the price of almonds will increase in future in the market. If all other variable are held constant, what would you expect for the new price and quantity of almonds? 

If the supply and demand functions are given by 20e^0.4Q and P = 100e^-0.2Q respectively, find the equilibrium price and quantity, and calculate the consumer’s and producer’s surplus

In the market for Fante Kenley, the supply and demand functions respectively are Q^s = 0.25P+10 and  -0.5P+100

When there is excess demand, price adjusts according to the equation dp/dt = 0.5(Qd - Qs)

a) Find the long run equilibrium price, P* (that is, the price at which there is no excess demand or supply). 

b) Formulate and solve he first order differential equation giving P as a function of time, t. Is this market dynamically stable or unstable? 

c) If the initial price is P = 50, how close will the price be to its long run equilibrium value, when t = 10? 

In the market for Fante Kenley, the supply and demand functions respectively are Q^s = 0.25P+10 and  Q^d = -0.5P+100

When there is excess demand, price adjusts according to the equation dp/dt = 0.5 (Q^d - Q^s)

a) Find the long run equilibrium price, P* (that is, the price at which there is no excess demand or supply). 

b) Formulate and solve he first order differential equation giving P as a function of time, t. Is this market dynamically stable or unstable? 

c) If the initial price is P = 50, how close will the price be to its long run equilibrium value, when t = 10? 

  If the number of people with the skills necessary to perform a job increases, labor ________ shifts to the ________.

a.     demand; left

b.    demand; right

c.     supply; left

d.    supply; right