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Microeconomics
Suppose that the consumer is asked to contemplate a gamble with a probability of 60% of
winning Birr 10,000 with a utility of 10 utils, and a 40% probability of winning Birr 15,000 with
a utility of 12 utils.
A. What will be the expected income and expected utility of the consumer?
B. If the utility of this consumer from a risk free alternative which gives him an income equal
to the expected income of the risky alternative given above is equal to 11 utils, is this
consumer risk lover or risk averse? Why? Illustrate your answer with the help of a diagram
winning Birr 10,000 with a utility of 10 utils, and a 40% probability of winning Birr 15,000 with
a utility of 12 utils.
A. What will be the expected income and expected utility of the consumer?
B. If the utility of this consumer from a risk free alternative which gives him an income equal
to the expected income of the risky alternative given above is equal to 11 utils, is this
consumer risk lover or risk averse? Why? Illustrate your answer with the help of a diagram
Microeconomics
Given the demand function P = 20 – 5Q, find the price elasticity of demand when price of the
commodity is 5 Birr per unit. Mention if the demand is price elastic or inelastic at this point.
commodity is 5 Birr per unit. Mention if the demand is price elastic or inelastic at this point.
Microeconomics
Given MUx = X, MUY = 4Y, Price of X is 3 Birr per unit and price of Y is also 3 Birr per unit. If
the income of the consumer is 1200 Birr, find the amounts of X and Y that the consumer chooses
to consume so as to maximize his utility.
the income of the consumer is 1200 Birr, find the amounts of X and Y that the consumer chooses
to consume so as to maximize his utility.
Microeconomics
Assuming the income of the consumer to be constant, what will be the effect of a decline in price
of both commodity X and commodity Y by the same proportion? Explain your answer with the
help of graph(s).
of both commodity X and commodity Y by the same proportion? Explain your answer with the
help of graph(s).
Microeconomics
(1). Explain what “equity” means as it relates to taxation.
(2) Discuss the two general equity standards of “benefits received” and “ability to pay.” Explain what each of these terms mean and how each impacts taxation.
(3) Define “horizontal” equity and “vertical" equity and explain how each impacts taxation. .
Microeconomics
(1). Explain cost-benefit analysis. (2) Identify and explain the steps in performing a cost-benefit analysis.
Microeconomics
· (1) Explain the difference between tax impact and tax incidence.
· (2) Identify and explain the three forms of shifting that can occur with tax incidence.
Microeconomics
In simple circular flow of economic activity,good and services flow via?
Microeconomics
How to derive TRS for Cobb doglous production function
Microeconomics
Why Marginal Utility MUy of XY + 2X equals X
