Microeconomics Answers

Q2) From the demand function 𝑄𝑑𝑥 = 24 − 4 𝑃𝑥 (Px is given in dollars), derive;

(a) the individual’s demand schedule and

(b) the individual’s demand curve?

Q8) The following table provides you the estimated price, cross, and income elasticities for preferred commodities. Indicate from the price elasticities (e) if the demand is elastic or inelastic; from the cross elasticities (exy) if the commodities are substitutes or complements; and from the income elasticity (eM) whether the commodity is a luxury, a necessity, or an inferior good.

Price Elasticity of Demand (e)

Beef

0.92

Potatoes

0.31

Sugar

0.31

Electricity

1.20

Restaurant Meals

2.21

Cross Elasticity of Demand (exy)

Beef, Mutton

0.28

Tea, Coffee

0.67

Coke, Pepsi

-0.61

Sugar, fruits

-0.28

Electricity, natural gas

0.2

Income Elasticity of Demand (eM)

Butter

0.42

Margarine

-0.20

Air Coolers

0.35

Utilities

0.20

Burger       o’ Clock

1.48

Most of the cost of a flat screen TV involves the LCD panel.Globally, 220 million flat screen TVs were sold in 2011 for $115 billion. Although scale economies in massive factories and volume discounts on electronic input components have driven the cost of LCDs down from $2,400 to $500 the last decade, the price has fallen even faster. In 2001, the average selling price of a large LCD panel was over$4,000. By 2011, this price had fallen below $600.Sony Corporation finds its flat screen TVs now fail to cover the full cost of the LCD panels and instead impose a $126 ($500 - $374) loss perTVsold.Nevertheless, the indirect fixed costs of the LCD factories including Korean Samsung, Japanese Sharp, Panasonic, and Sony constructed are partially covered by continuing its operation (continueproduction). Losses would be greater in the short run if they shut down. As an economic consultant, what would you advise Sony Corporation to do in light of the competition from the other manufacturers?(10marks )

firm’s production function is 𝑞(𝐾, 𝐿) = 𝐿

𝛽𝐾

𝛼

, so that the

𝑀𝑃𝐿 = 𝛽𝐿

𝛽−1𝐾

𝛼

and the 𝑀𝑃𝐾 = 𝛼𝐿

𝛽𝐾

𝛼−1

. Let 𝛼 =

2

3

 and 𝛽 =

1

3

. Let the slope of the isocost 

line be −

𝑤

𝑟

, and let 𝑤 = 𝑅4 𝑎𝑛𝑑 𝑟 = 𝑅27.

a) Find the marginal rate of technical substitution. (10)

b) Assume that a firm wants to make 1080 units of a product. What is the lowest cost at which 

it can produce 1080 units? (10)

[20]

QUESTION 4 

4.1 Use graphs to explain utility maximization and choice in the two-goods situation. (10)

4.2 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? (10)

[20]

QUESTION 5 

5.1 Maximize the function 

 𝑢 = 4𝑥

2 + 3𝑥𝑦 + 6𝑦

1. The ability to make good decisions is the key to successful managerial performance. Discuss the common elements shared by all decision-making processes. Provide a real-world example to elaborate your answer.
2. Marginal analysis is one of the most useful concepts in economic decision making. Discuss and show examples including graphs to support your answer.

Differentiate between public good and private good, giving two features of each. With the aid of diagrams illustrate and then discuss why in the derivation of the aggregate demand for private goods, the goods are summed horizontally while the summation is vertical for public goods

Could John Rawls’ Principles of Justice have resulted in a better socio-political outcome , discuss your response in detail. 

The Recent May 2021 Arab (Palestinian)-Israeli conflict, arose from the alleged usurping of the Arab land East of the Old city of Jerusalem from the current Arab Owners to Israeli families who claim to have owned the land previously. These recurrent conflicts have their foundation in the 1948 establishment of the state of Israel. To create lasting peace, would Pareto theory of justice be sufficient for the distribution of land in Israel specially in Jerusalem. With the aid of an Edgeworth box, illustrate and then discuss the above statement in light of Nozick’s Principles of Justice. 

Question involving finding profit maximizing profit I must send photos please get back to me ASAP

Make use calculus to prove that the price elasticity of demand is a constant everywhere

along the demand curve whose demand function is , where A is a positive constant

and p is the market pricMake use calculus to prove that the price elasticity of demand is a constant everywhere

along the demand curve whose demand function is , where A is a positive constant

and p is the market price.e.