Microeconomics Answers

the market for pizza has the following demand and supply schedules:

price: $8,$9,$10,$11,$12,$13

quantity demanded: 135,104,85,68,53,39

quantity supplied: 26,53,85,98,110,121

a.graph the demand and supply curves. what are the equilibrium price and quantity in this market?

b.if the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium?

c.if the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium?

a company is considering building a bridge across a river. the bridge would cost $1.5 million to build and nothing to maintain. the following table shows the company's anticipated demand over the lifetime of the bridge:

price per cross: $8,$7,$6,$5,$4,$3,$2,$1,$0

number of crossing in thousand: 0,100,200,300,400,500,600,700,800

a.if the company were to build the bridge, what would be its profit-maximizing price? would that be the efficient level of output? why or why not?

b.if the company is interested in maximizing profit, should it build the bridge? what would be its profit or loss?

c.if the government were to build the bridge, what price should it charge?

d.should be government build the bridge? explain

If the multiplier is 4, a R40 billion increase in net exports will?

A perfectly competitive firm is in equilibrium where marginal cost is equal to marginal revenue because:

How do you know whether your estimated model is a good one or not? Explain.

1.     Consider the following model relating fertility (Y), as measured by the number of children born, to education (X),   

(i) What kind of factors are contained in the error term? Are these factors likely to be correlated with the level of education?

(ii) Will a simple linear regression analysis produce an unbiased estimate of the effect of education on fertility? Explain.

1.     Based on the simple linear equation given below answer the following questions.            

 y=a+Bx+e

a.     Write the dependent variable------.

b.     Write the error term----------.

c.      Write the intercept-------------.

d.     Write the explanatory variable----------

e.     Write the slope -----------. How do you interpret it?

1.     What are the steps (methodology) that we need to follow in econometric analysis?

v> Combination

Tablet (units) Coffee (units)

A 0 10,000

B 100 9,000

C 200 7,500

D 300 5,500

E 400 0

Find the opportunity cost incurred by the economy to change production from

combination B to D.

(2 marks)