Microeconomics Answers

What happens when a new idea leads to abnromal profit in a monopoly market and how do other firms take advantage of the abnormal profit?

Farmer McDonald gives banjo lessons for $20 an hour. One day, he spends 10 hours planting $100 worth of seeds on his farm. What opportunity cost has he incurred? What cost would his accountant measure? If these seeds yield $200 worth of crops, does McDonald earn an accounting profit? Does he earn an economic profit?

What happens when a new idea leads to abnromal profit in a monopoly market and how do other firms take advantage of the abnormal profit?

A firm operates in a perfectly competitive market. The market price of its product is 4

birr and the total cost function is given by TC=1/3Q^3-5Q^2+20Q+50

, where TC is the

total cost and Q is the level of output.

a) What level of output should the firm produce to maximize its profit?

b) Determine the level of profit at equilibrium.

c) What minimum price is required by the firm to stay in the market?

Opportunity cost is best defined as?

As more and more units of a good are consumed by a household, the total utility gained from the good will

A country’s production possibility curve would shift inwards

Gift cards are a popular holiday gift, with between $40 and $45 billion being spent on gift cards annually.

a) Suppose a consumer is indifferent between receiving a $100 gift card for Best Buy and $100 in cash. Is the optimal bundle an interior solution or a corner solution?

b) If a consumer is indifferent between a $100 gift card and $50 cash, where on their budget curve does their indifference curve lie? Show on a graph

Demand

 In what sense is taxing food a “good” way to raise revenue?