Microeconomics Answers

Estimate the monthly cost of your education in first semester in the university keeping both the explicit and implicit costs in view.

The lower the net tax rate, __________ the simple multiplier and __________ real GDP is in response to shocks to autonomous spending.

"The narrative comes before the numbers." Explain what this statement means with respect to budgeting. (2) Explain why it is important that the budget "narrative" be drafted first

Define or explain what “fiscal sustainability means. (2) What factors or elements must be considered in determining whether fiscal sustainability is being met? (3) Identify and explain at least three approaches that administrators use to reduce budgets to meet fiscal sustainability.

Suppose a company is producing q(1) phones and q(2) computers. The cost function of the company is 1000+70q(1)+80q(2). Assume that the ratio of production quantities q(1) and q(2) is 1:1. (The production ratio is the same for phones and computers.) Derive the Ray Average Cost. What is the average cost if total production (Q) is 100? 

Differentiate between private goods and public goods and then illustrate and discuss why in the 

provision of private good the summation is horizontal while it is vertical in the case of the provision 

of public good.

Critically discuss any three Macroeconomic and at least two Microeconomic reasons for growth 

in government expenditure. 

Which of the following statements is/are correct about a firm operating in a perfectly 

competitive market?

[1] The market price is given by the firm’s average variable cost.

[2] The firm has perfect information and consumers have imperfect information.

[3] The level of production efficiency is greater in the long run than in the short

4] The firm faces the same demand schedule as its marginal revenue.

In competitive markets, what do business owners do when the minimum wage rises? How does this affect the teenagers ? explain the suitable reason for the same.

A survey indicated that chocolate is the most popular flavour of ice cream in America. For each of the following indicate the possible effects of demand or supply or both as well as equilibrium price and quantity of chocolate ice cream

a) A severe drought in the Midwest causes dairy farmers to reduce the number of milk-production cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream