Microeconomics Answers

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.

A firm faces the following linear inverse demand for its product P = 60 - 2Q. a)Find the firm's total revenue function TR (Q).b)Find the expression for the firm's marginal revenue.c)Assumingthat the marginal cost of production is given by MC=8. What will be the equilibrium output and price

Your community newspaper, The Xpress, has fixed production costs of K70 per edition, and marginal printing and distribution costs of 40n/copy. The Xpress sells for 50n/copy. Write down the associated cost, revenue, and profit functions.What profit (or loss) results from the sale of 500 copies of The Xpress?how many copies should be sold in order to break even

The market is unable to provide national defence efficiently.” Discuss this statement critically.

Make a use of calculus to prove that the price elasticity of demand is a constant ε everywhere along the demand curve whose function is Q = Apε , where A is a positive constant and p is the market price

1.     A monopolist has demand and cost curves given by:

QD = 10,000 - 20P

TC = 1,000 + 10Q + .05Q2

i.            Find the monopolist's profit-maximizing quantity and price.

ii.            Find the monopolist's profit.

a)   If the advent of new and better technology in a perfectly competitive market leads to a large reduction in costs of production, how will this affect the market?