Microeconomics Answers

Suppose the demand and supply are given by Q=500 - 2P and Q =100 - 3P

A. Which function is demand function and why.

B. Computer the equilibrium price and quantity.

C. Compute the consumer surplus and producer surplus.

D. Suppose a 1 Ghana cedis exercise tax is imposed on the good. Determine the new equilibrium price and quantity

E. Compute the tax revenue to the government

F. Compute the deadweight loss resulting from the tax

With the aid of a diagram analyze the income, substitution and told effects of a price change on the following types of goods

A. Normal good

B. Inferior good

c.giffen good

David's utility function for good X and Y is given by U (X,Y) =X²y³. Where p_x,p_y and I are the price of good X, price of good Y and consumer income respectively.

A. Write the budget constraint of the consumer

B. Derive the demand function for good X and Y

C. What combination of X and Y maximizes the consumer at I=100,p_x=4,and p_y=5

D. Calculate the marginal rate of substitution between X and Y at equilibrium and interpret your results.

E. Suppose david faces a new utility such as U(X, Y)=25_x^0.2 Y^0.75 for consuming commodity X and Y, redo question b and c.

F. Suppose david faces another new utility function such as U (X, Y) =15xy² for consuming commodity X and Y,redo question b and c

,C. What combination of X and Y maximizes the consumer at I=100

Use the following functions that show quantity demanded and quantity supplied to answer the question.

Qd = 600 - 30p

Qs = -300 + 120p

If the price is R8, then there will be a surplus of _____ units. 

If the equation for a market demand curve is Qd = 100 – 0,5P and the equation for a market supply curve is Qs = –20 + P, the market equilibrium quantity is:

Given the demand for a product as Qd = 100 - 5P and the supply is given as Qs = -20 + 3p. You are told equilibrium is obtained at the point where Qd = Qs. The equilibrium price for the product is

Suppose a certain contractor wants to maximize profit from building one bridge. The

contractor uses both labor and capital, and efficient combinations of Labor and capital

that are sufficient to make a bridge is by the function 0.75L^1/2 K ^1/2. If the prices of labor

(w) and capital (r) are $ 6 and $ 16 respectively

A) Find the least cost combination of L and K?

B) Find the minimum cost?

Consequence

A 40 percent price reduction of The Times led to a 17.5 per

cent increase in its sales.

Price elasticity of demand for The Times: -0.44

Note: The revenue earned by The Times fell from

£169,576 to £134,689!

Competing papers suffered!

Independent suffered most, with a 15.2 percent loss of sales,

indicating a cross-price elasticity of 0.38

Cross-price elasticity for the Guardian was 0.11, and that for

the Daily Telegraph was 0.05.

Implications?

What do you expect would happen to the sales of The Financial

Times?

Why did The Times adopt a strategy of price cut?

In South Africa, cigarettes are forbidden, so people trade cigarettes in a black market. The cigarette demand is 𝑄𝐷 = 12 − 𝑝, and cigarette supply is 𝑄𝑆 = 2𝑝. (5) Find the equilibrium price and quantity in the black market. Interpret your results The government becomes aware of the black market and reinforces the polices that half of the cigarette supply would be seized and destroyed. Under this circumstance, what are the demand and supply functions? What is the new equilibrium price and quantity? Show the change by using a supply and demand diagram. (6) How does the consumer surplus change between (a) and (b)? Calculate total surplus. (4)

The price of pork falls in the market. Discuss using a diagram the substitution and income effects to the purchase of pork given the lower price. How is this related to the law of demand?