Microeconomics Answers

How would a speculation that petrol price is going to be doubled in two days affect your demand for petrol today and why? Provide economic explanation

1. Discuss the difference between individual and market demand.

2.     How does the study of managerial economics help a business manager in decision-making? Illustrate your answer with example from output and pricing issues.

1. Explain the difference between micro and macroeconomics?
2. State why managerial economics should be thought of as applied microeconomics?
3. Explain the difference between short run and long run production.
4. What does perfect completion mean? State few assumption of perfect competition.
5. Discus the idea of wealth- maximization objective of the firm and its relevance comparing to that of the profit maximization objective?
6. Why do monopolies arise in the market?
7. Discuss the types of price discrimination using example.
8. Explain the difference between market segmentation and targeting strategies.

2.     Suppose that there are 250 identical individual consumers in the market for commodity X, each with a demand function given by d_x = 6-P_x and 50 identical producers of commodity X, each with a supply function given by s_x =5P_x. (8 Marks)

a)     Derive the market demand function and the market supply function for commodity X.

b)     Compute the market equilibrium price and equilibrium quantity mathematically.

c)     Tabulate the market demand schedule and the market supply schedule for commodity X.

d)    show whether surplus or shortage occurs at

i)                   P = 2

ii)                 P = 5

1.     Assume the following for price discriminating monopolist aimed at maximizing profit. Total demand for the product of the monopolist is Q = 50-5P (P = 100-2Q) (10 Marks)

·        Demand in Market one is Q1= 32-0.4P1(P1= 80-2.5Q1)

·        Demand in Market two is Q2= 18-0.1P2(P2= 180-10Q2)

·        Cost function is C = 50+40Q (where Q = Q1+ Q2)

a.      Find equilibrium quantities (Q1and Q2),

b.     Find equilibrium prices (P1and P2),

c.      Calculate profit (π),

d.     Calculate and Interpret elasticities (ε1 and ε2)

1. If the inverse demand curve of profit maximizing monopolist is given as P =1200 − 2Q , and cost function as

 C = Q3 − 61.25Q²+1528.5Q + 2000, find equilibrium output level, monopolist price, and profit. (6Marks)

The Zenith television company faces a demand function for its products which can be expressed as Q = 4000 – P + 0.5Y where Q is the number of televisions, P is the price per television, and Y is average monthly income. Average monthly income is currently equal to RM2,000.

a) Express the inverse demand curve faced by Zenith at the current income level. (2 marks)

b) At what price and quantity is Zenith’s total revenue (TR) maximum? State the maximum TR value. Show the value of marginal revenue at this price and quantity. (4 marks)

c) What is the price elasticity of demand for Zenith’s demand function at the price and quantity derived in (b)? Interpret. (3 marks)

d) Why might Zenith choose to produce at a price and quantity different than that derived in (b)? (3 marks)

What is the effect on the market price and output of hamburger with reference to widespread disease of beef and dramatic improvement in fast food technology

Give economic enterpretiton of demand function

Why is price discrimination not possible under the perfect market

The market for Good A is in equilibrium. If there is a decrease in the price of an input used to produce Good A, the impact on the market for Good A will be