Microeconomics Answers

Given demand equation P=50-2Qd and supply equation P=10+2Qs calculate. 

(a) consumer surplus

(b) producer surplus

(c) total surplus

assuming pure competition

Sadiq is thinking about opening a hardware store. He estimates that it would cost Rs.3,500,000 per year to rent the location and buy the merchandise. In addition, he would have to quit his Rs.800,000 per year job as a financial analyst.

1. What is Sadiq’s opportunity cost of running the store for a year? 
2. Sadiq thinks he can sell Rs.4,200,000 worth of hardware in a year. What would his accountant consider the store’s profit? 
3. How much revenue would the store need to generate for Sadiq to earn zero economic profit? 

Hira has Rs.1200 a week to spend on yogurt and mangoes. The price of yogurt is Rs.200, and mangoes are Rs.400 a box. (Hint: Quantity of mangoes to be plotted on the x-axis of the budget line)

How do Hira’s budget line change if, other things remaining the same,

Rotate outward

Rotate inward

Shift parallel outward

Shift parallel outward

Bend inside from the middle

Bend outside from the middle

The price of mangoes falls?

Hira’s income increases?

The price of yogurt rises?

Hira’s income decreases?

A.Shift parallel outward

B.Shift parallel inward

C.Rotate outward

D.Rotate inward

E.Bend outside from the middle

F.Bend inside from the middle

Hira has Rs.1200 a week to spend on yogurt and mangoes. The price of yogurt is Rs.200, and mangoes are Rs.400 a box. (Hint: Quantity of mangoes to be plotted on the x-axis of the budget line)

1. Calculate the Y-intercept for the budget line. 
2. Calculate the X-intercept for the budget line. 
3. Calculate the slope of the budget line. 

QUESTION 5

MonoMed, having a Patent on production of a medicine, has following Demand and Cost Schedule :

Price (Rs ) 12 11 10 9 8 7 6 5 4 3

Quantity 0 1 2 3 4 5 6 7 8 9

TVC ( Rs ) 0 13 16 20 25 31 38 46 56 68

Where Fixed Cost is Rs 5

e. How would you define the market structure of MonoMed? What are the characteristics? Does the firm have pricing power? (1 Mark)

Actual GDP in 2017 was UAH 3,000 billion, while potentially possible was UAH 3,375 billion. The natural unemployment rate for the country is 4%. Find the actual unemployment rate.

Assume the balance of aggregate demand and aggregate supply was broken by the changes in income of economic entities. How the balance may be restored? Demonstrate this with the aggregate demand and aggregate supply curves. Why the growth of aggregate demand may not lead to inflation?

Qno:01

In Pakistan internet service is ought to be considered as the perfectly competitive industry. Following is the information available for the internet service provider A operating in the market. 

Total output

Total Cost

180

10

280

20

400

30

530

40

670

50

820

60

980

70

1150

a. Briefly discuss the characteristics of the market Service Provider A is operating.​2 Marks

b. If the market price of the fruit is 16​​​​​​6 Marks

i. Find how much output will the firm produce (Show calculations).​2 Marks

ii. Illustrate it graphically​​​​​​​2 Marks

iii. Find if the firm is maximizing profit or minimizing loss (show calculations) and highlight the same in the graph drawn in part ii. ​​​​​1 Mark

iv. From your answer in part iii, explain if the firm is operating in the LR or SR. 1 Mark

suppose a monopolist sells to two groups that have constant elasticity demand curve with elasticity e1 and e2. the marginal cost of production is constant at C. What price is charged to each group?

MLC= 3+4L

calculate the cost of employing the first eight labourers ?

please show workings