Microeconomics Answers

the data below shows a tabulation on the production of a hypothetical product

output (Q) total cost

0 25

1 32

2 38

3 42

4 48

5 58

6 67

7 78

8 98

use the data to answer the following questions:-

1. determine the total fixed cost
2. average variable cost schedule
3. marginal cost schedule
4. suppose this product is produced on a perfect market and the price of the commodity= 10. Determine the output Q that will maximize the profits. What is the maximum profits achieved by the firm? (show all the workings)

1. explain in details and using diagrams where appropriate the three main salient characteristics of each of the following market structures

a. perfect market

b. monopolistic competition market

c. monopolistic market

d. oligopolistic market

1. draw a diagram to show a firm in a monopolistic competition market making a short run loss but remaining in production. in your diagram, include the labels for the following: AR for average revenue; MR for marginal revenue; AC for average cost ; AVC for average variable cost and MC for marginal cost
2. for price discriminating monopolist, the inverse demand functions for two markets are given as follows

p1= 16-Q1

p2=9-Q2

where:-

p1 is the price in sub-market 1

p2 is the price in sub-market 2

Q1 is quantity demanded in sub-market 1

Q2 is quantity demanded in sub-market 2

Using the above information, calculate the profit maximizing outputs and prices in each of the sub-market when the industry's marginal cost equals 10 units

4.​Suppose the demand for inject printers is estimated to be 

   Q= 1000-2p+5Px-3Py+0.1Y

  P=80   Px= 20     Py= 150       Y= 1000

A.​Calculate price elasticity of demand? (2 pt) 

B.​Calculate cross price elasticity of x and y (Exy)? And state the nature of good 

C.​Calculate income elasticity of demand and what we can say about the goods

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