Microeconomics Answers

The market mechanism is the tendency for prices to change until the quantity demanded equals quantity supplied. Using illustrations provide an explanation on how the market adjusts to the market equilibrium when the price in the market is not originally set at the market equilibrium price.

You are provided with the following demand and cost information for a monopolist.P=60-0.25 Q and TC=Q2+40Q+50 Where P is price, Q is quantity of the product and TC is total cost. Determine the profit maximizing level of output and prices

. Explain how transaction cost and imperfect information affects business management on the attainment of profit.

A local swimming pool charges nonmembers $10 per visit. If you join the pool, you can swim for $5 per visit but you have to pay an annual fee of F. Use an optimal choice model to find the value of F such that you are indifferent between joining and not joining. Suppose that the pool charged you exactly that F. Would you go to the pool more or fewer times than if you did not join? For simplicity, assume that the price of all other goods is $1.(Draw the graph)

john optimal choice at pizzeria is one pizza and two colas at given prices and income. The pizzeria announces a special: All pizzas after the first one are half-price. Show the original and new budget constraint. What can you say about the bundle Ali will choose when faced with the new constraint?

Evaluate the following statement, ‘a computer systems engineer could paint his house, but it makes more sense for him to hire a painter to do it.’

2. The total cost equation of a firm is given by the equation

  TC=5000+2000Q-10Q²+0.5Q³

where TC is total cost and Q is the level of output.

a)     What is the firm’s total fixed cost?

b)     What is the equation for the firm’s total variable cost (TVC)?

c)     What is the equation for the firm’s average total cost (ATC)?

d)    What is the equation for the firm’s marginal cost (MC)?

Gross substitute and gross complementarity of a good is established on the basis of its substitution and income effects.

The county manager decides that a new community park should be constructed based on the projected construction and operating expenses as well as estimates of how much residents would be willing to pay for the park. This approach reflects:

a.contingent valuation.

b.wage valuation

c.cost-benefit analysis.

d.revealed preference valuation.

Consider a monopoly whose total cost function is TC=Q3-30Q2+302Q, whose marginal cost function is MC= 3Q2-60Q+302, whose demand is P=329-30Q, and whose marginal revenue function MR= 329-60Q, where Q is output and P is price.

Assume that the firm maximizes profit but cannot practice price discrimination 

How much does the firm produce?        

How much does the firm charge?

How large are the firms profit?