Microeconomics Answers

Mr Hart sold his house. The asking price was R720 000, and he decided that he would take no less than R700 000. After some negotiation, he sold the house for R705 000. His producer surplus is

Suppose Lauren, Leslie and Lydia all purchase tablets for R1 500 each. Lauren's willingness to pay was R3 500, Leslie's willingness to pay was R2 500 and Lydia's willingness to pay was R2 000. Total consumer surplus for these three would be

Betty decides that she would pay as much as R9 000 for a new iPhone. She buys the iPhone and realises negative consumer surplus of R1 500. How much did she pay for the iPhone?

Recent research article entitled “Milk Manic” made headlines in South Africa. The article explains the significant health benefits one glass of milk per day. In only seven days you will become stronger and smarter, but milk super changes your immune system. The scientist father found that consuming a glass of milk a day as a cure for high blood pressure, anxiety and insomnia. 5.1. By the aid of a graph, illustrate and explain how the research article will affect the equilibrium price and quantity in the milk market.

Khalid used to be a DJ earning R500 000 a year, but he now works as a plumber. Each year, his direct costs are R185 000. This includes the annual electricity, water and levy bill of R82 000, and annual rent of R75 000. He has R120 000 of financial capital tied up in the business throughout the whole year, and the market interest rate is 8.5%. His annual revenue as a plumber is R900 000. Which of the following statements is correct?

Log (earnings) = 4.016 + 0.092 . educi  + 0.079 .expei +  0.002 . experi 2 

 ( 0.222)  ( 0.008) ( 0.025) (0.001)

log ( earnings )I  = β1 + β 2 ⋅ educI  + β 3 ⋅ experI  − β 4 ⋅ experI2 + β5 ⋅ abilityI  + εI . 

 In this regression, what do you expect the sign of β5 (the coefficient on ability) to be? 

 a). What do you think the sign of the correlation between ability and years of education? 

 b). If we estimate the regression function with ability included, do you think that the 

estimated value of β 2 will be greater or less than what it was in the regression without ability? Explain.

In your opinion, should local industries in south be protected against world competition?(25 marks)

Critically discuss the negative and positive of covid-19 on the south African economy? (25 marks)

On contrary, why should retailers such as fruit and veg not keep too much inventory? (10)

Why should electricity generation plants (Eskom) keep more stock rather than less stock?

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