Microeconomics Answers

What are the reasons for and against treating agriculture differently from a legal and policy standpoint? Should agriculture be exempted from environmental, labor and antitrust laws.?

Assume labor (L) is the only variable input used in the production process, a firm’s production

function is given by 2 3 Q  7L 10 L  L where Q represents total product.

Classify the production function in to the three stages of production.

Two students are preparing for their micro exam, but they seem confused: Student A: ‘‘we learned

that demand curves always slope downward. In the case of a competitive firm, this downward sloping

demand curve is also the firm’s marginal revenue curve. So that is why marginal revenue is equal to

price.’’ Student B: ‘‘I think you have it wrong. The demand curve facing a competitive firm is

horizontal. The marginal revenue curve is also horizontal, but it lies below the demand curve. So

marginal revenue is less than price.’’ Can you clear up this drivel? Explain why neither student is

likely to warrant a grade commensurate with his or her name.

Two students are preparing for their micro exam, but they seem confused: Student A: ‘‘we learned

that demand curves always slope downward. In the case of a competitive firm, this downward sloping

demand curve is also the firm’s marginal revenue curve. So that is why marginal revenue is equal to

price.’’ Student B: ‘‘I think you have it wrong. The demand curve facing a competitive firm is

horizontal. The marginal revenue curve is also horizontal, but it lies below the demand curve. So

marginal revenue is less than price.’’ Can you clear up this drivel? Explain why neither student is

likely to warrant a grade commensurate with his or her name.

Scenario 1 for questions 11 and 12A monopolist faces the following demand curve, marginal revenue curve and total cost curve for its product:Q = 400 -2PMR = 200 -QTC = 10Q11.Refer to scenario 1. How much profit does the monopolist earn?

One might expect firms in a monopolistically competitive market to experience greater swings in the price of their products over the business cycle than those in an oligopoly market. However, fluctuations in profits do not necessarily follow the same pattern 

what would we expect to happen to the market when the government imposes a price floor below equilibrium?

• Draw a Market supply curve for Coffee beans.  What happens to it in each of the following scenarios?   Why?
• Technology which allows cheaper and quicker processing of coffee beans
• The price of tea leaves increase
• Subsidy given to coffee producers have are reduced
• The no. of producers increases in the coffee beans market
• Government increases the minimum wages of labour workers
• Price of Coffee beans increase
• Poor natural conditions for coffee production

• Draw a demand curve for Wai Wai noodles.  What happens to it in each of the following scenarios?   Why?
• The price of 2pm noodles increases
• The income of a consumer who treats Wai Wai as an inferior good increases
• The taste of majority of consumers shifts away from Wai Wai to Ramen noodles
• The price of wai wai increases
• Famous Newspaper publishes an article on harmful effects of instant noodles

When there is a technological advancement in the cellphone industry, consumer surplus in that market will