Microeconomics Answers

1.      Suppose that a researcher estimates a consumptions function and obtains the following results:

where C=Consumption,          Y_d=disposable income, and numbers in the parenthesis are the ‘t-ratios’

a.      Test the significant of Yd statistically using t-ratios

b. Determine the estimated standard deviations of the parameter estimates 

The Minister of Transport released its Festive season road accident statistics which shows that the probability of drivers committing an accident is 8% with utility , where H stands

for year income.

The Minister further claims these Festive season road accidents cost the state (in terms of claims lodged) an average of R84 000 per annum. The Road Accident Fund is an insurance scheme providing compulsory indemnity cover to victims of vehicle accidents and taxi drivers.

(c)Due to high accident rates in South Africa during the Festive season, the Road Accident

Fund has issued a warning to government that the fund will be insolvent soon. Advise the Minister on the cost of insurance that can collapse the scheme.

Ahmad wants to deposit money for 5 consecutive years starting 4 years from now so she can withdraw $50,000 twelve years from now, Assume the interest rate is 10% per year. The annual deposit is closest to:(previous answers are incorrect, please answer correctly with Calculation because it is urgent)??

a. $5185

b. $5085

c. $5585

d. $5285

there are 2 goods x & y has utility function v=x²+y³ two commodities 2 and 6 respectively & his/her budget is 40 what is the quantities of x & y what will be the maximize utility

The demand curve facing a monopoly is P= 100 +5Q. The firm cost is c(Q)=10+5Q. What is profit maximising output?

Mulaudzi liquor operates in a competitive industry to produce alcohol at a constant marginal cost of R28 per unit. Immediately when the industry is monopolized, marginal cost rise to R35 per unit because of the R5 per unit must be paid to lobbyists to ensure that only Mulaudzi firm receive liquor license

Qd=1300-15P

And Marginal revenue curve by

MR= 15-Q/10

a) Calculate the monopoly quantity

Consider a person who

consumes water and bread, deriving utility by xy if x is the amount of water consumed and

y is the amount of bread consumed. Suppose this person's income is Rs. 10, the unit

price of bread is Rs. 3 and the unit price of water facing this person is Re. 1. The price of

water incorporates a per unit subsidy of Re. 1, i.e., for every unit of water consumed by

this person, she pays Re. 1 to the water supplier and the government pays Re. 1 to the

water supplier. Suppose this person's demand is (x0, y0). ,If the government provides this person a lump-sum income subsidy that exactly offsets 

her utility loss on account of removal of the water subsidy, then the required lump-sum 

subsidy is

What are the reasons behind a firm experiencing economies of scale first, followed by

diseconomies of scale?

‘If an input is inferior, its marginal product must be negative.’ Comment.