Microeconomics Answers

Define consumer behavior , utility ,MU ,TU and their relationship?

(i) Under what conditions firm will shut down temporarily? Explain.

Demand

. The catch-up effect says that countries with low income can grow faster than countries with higher income. However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.

Using diagrams to describe Larry, Judy, and Carol’s risk preferences if their utility as a function of income is given as follows

a) Larry:

b) Judy:

c) Carol:

Sarah and Jane are two representative individuals living in an economy that produces two goods, X and Y. Sarahʹs and Janeʹs utility functions are given as

Sarah:

Jane:

Jane marginal utilities

Sarah marginal utilities

Considering the importance of risk, which alternative should an investor choose?

A sales tax of $1 per unit of output is placed on a particular firm whose product sells for $5 in a 

competitive industry with many firms.

a. How will this tax affect the cost curves for the firm?

b. What will happen to the firm’s price, output, and profit?

c. Will there be entry or exit in the industry?

Microeconomics focuses on?

If a consumer increases her quantity of ice cream consumed by 100% when her

income rises by 25%. Calculate her income elasticity of demand for the ice cream and

interpret the result. (2marks)