Microeconomics Answers

The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name Y. Good Y is an inferior good. 

a. How will the demand for good X change if consumer incomes decrease? 

b. How will the demand for good Y change if consumer incomes increase? 

c. How will the demand for good X change if the price of good Y increases? 

d. Is good Y a lower-quality product than good X? Explain.

A Monopolist producing and supplying cooking gas to Mombasa city faces the demand function. Q = 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q². 

i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit.  

ii. Explain how her profits she will affected if regulators forced her to operate like a perfectly competitive firm.  

iii. Illustrate and compute deadweight loss and lost consumer surplus associated with her Monopoly operations. 

b. Based on any community project of your choice, use indifference curves and the budget concept to illustrate your understanding of consumer equilibrium

Determine the average function for each of the following total functiona.

a) Total revenue= 100Q-Q2

b) Total Cost= 1000+ 10Q+0.01Q2

c) Total Profit = 50Q - 0.1Q2 - 1000

The demand equation for a company is P = 200 -3x

And the cost function is C(x) = 75 + 80x - x²

a)     Determine the value of x and the corresponding price that maximize the profit

b)     If the government imposes a tax on the company of R4 per unit quantity produced, determine the new price that maximizes the profit.

Some years ago, it was estimated that the demand for steel approximately satisfied the equation P = 256 - 50x

And the total cost of producing x units of steel was C(x) = 182 + 56x

Determine the level of production and the corresponding price that maximize the profits.

Suppose that the demand equation for a monopolist is

P= 100 - 0.01x

 and the cost function is

C(x) = 50x + 10 000

Find the value of x that maximizes the profit and determine the corresponding price and total profit for this level of production

Suppose John have R1 800 to spend on two goods: shoes, and shirts and that the price of a pair of shoes is R120 and the price of shirt is R100. (i). Given total income and prices of two goods, how many pairs of shoes will John obtain if he decides to use all of his income on shoes and how many units of shirts will he afford if he decides to buy shirts only?What will happen to John’s budget line if the price of shoes (measured on horizontal axis rise from R120 to R180? Explain by stating numerical figures.

The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name Y. Good Y is an inferior good. 

a. How will the demand for good X change if consumer incomes decrease? 

b. How will the demand for good Y change if consumer incomes increase? 

c. How will the demand for good X change if the price of good Y increases? 

d. Is good Y a lower-quality product than good X? Explain.