Microeconomics Answers

Analyse agricultural legislation which governs non-marketing agricultural activities in south africa

using the latest budget statement for kenya june 2021,identify micro and macro aspects in relation to economic development and responses to economic shocks(exchange rates,prices and pandemics)

(ii)              Given the following Cobb Douglas Utility function u(x₁, x₂) = x₁^cx₂^d.What is Marginal Rate of Substitution MRS x₁, x₂ ?

Which of the following would NOT constitute a barrier to entry?

a. Economies of scale.

b. Control of essential factors of production.

c. Control of distribution outlets.

d. Well-established brand loyalty.

e. No restrictions on imports.

Discuss how you would ensure that an Ordinary Least Squares regression meet the BLUE requirement. (17marks)

1.    Given the following production function Q = 20L²K and the unit prices of labor and capital to be Birr 48 and 12 respectively, then

a. What combination of labor and capital maximizes output with a cost of Birr 720?

b. What is the maximum output?

c. Show the output maximizing condition graphically.

1.    Given the following production function Q = KL² and the unit price of labor and capital to be Birr 15 and 10 respectively, then

a.   What combination of labor and capital minimizes the cost of producing 384 units?

b.   What is the minimum cost?

c .Show the cost minimizing condition graphically?

Question 5. (10 Marks) (Max. 1000 words)

a) Explain why cigarette smoking is often described as a good with negative externalities. (3m)

b) Why might a tax on cigarettes induce the market for cigarettes to perform more efficiently? (3m)

c) How would you evaluate a proposal to ban cigarette smoking? Would a ban on smoking necessarily be economically efficient? (4m)

Question 1.

Consider a monopolized industry. Is the deadweight loss from this industry greater if (1) the government sets price equal to average total cost or (2) the government sets price equal to marginal cost? Why? Use examples of monopoly form your own country to answer this question.

Question 3.

"What is the point of entering a perfectly competitive industry if it is simply to earn zero profits anyway?" Discuss this statement with reference to the long and short run, as well as to heterogeneity across firms.

Question 4.

Why is it the case in a long-run monopolistically competitive equilibrium that the firm’s demand curve is tangent to its average cost curve? Why could it not be a long-run equilibrium if the demand curve “cut through” the average cost curve

(10 marks)

1.  Why are price ceilings said to be inefficient? Can the government restore efficiency by imposing a production quota along with the price ceiling? Who benefits and who loses from such a program? ( Max.500 words)

1. Why are price floors said to be inefficient? Can the government restore efficiency by imposing a production quota along with the price floor? Who benefits and who loses from such a program? ( Max.500 words)