Microeconomics Answers

There is an increase in the number of adverts highlighting the danger of consuming sugar. Which

of the following is likely to occur in the market for sugarless sweets, as a result of this?

a) An increase in both the equilibrium price and quantity traded.

b) A decrease in equilibrium price and an increase in equilibrium quantity traded.

c) A decrease in both the equilibrium price and quantity traded.

d) An increase in the equilibrium price and a decrease in the equilibrium quantity traded.

An increase in supply... 

a) indicates that more is supplied at higher prices.

b) indicates that more is supplied at lower prices.

c) indicates that more is supplied at all prices.

d) is illustrated by an upward shift of the supply curve.

In using the tanks and trucks in a production possibilities curve with increasing opportunity cost producing more and more tanks

Consumer surplus indicates that...

a) more will be demanded at lower prices than at a higher prices.

b) it is impossible to increase consumer well-being by changing the way in which income is spent.

c) consumers often get more value from a good than is represented by the price they pay for that good. d) the allocation of resources is decided by the interaction of buyers and sellers. 

Consumer surplus indicates that

Consumer surplus indicates that... (4 marks) a) more will be demanded at lower prices than at a higher prices. b) it is impossible to increase consumer well-being by changing the way in which income is spent. c) consumers often get more value from a good than is represented by the price they pay for that good. d) the allocation of resources is decided by the interaction of buyers and sellers.

What information is embodied in an indifference curve and the budget line in the

work–leisure model? Draw an indifference map and budget line and locate worker’s

optimal position.

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

When costs are at a minimum,

a)      the ratio of the MP_L/MP_K < P_L/P_K.

b)     MP_L = MP_K.

c)      the extra output we get from the last dollar spent on an input must be the same for all inputs.

d)     Price L = Price K.

• Is Industrial Economics different from Industrial Organisation? Justify your answer.

Below is a list of three (3) different markets. The market share of the firms in each market is given. Market A: 40%; 20%; 23%; 9%; 8%.

Market B: 26%; 24%; 23%; 27%

.Market C: 80%; 10%; 6%; 3%;1%. •

Calculate the 3-firm Concentration Ratio, CR(3) of each market. Interpret your results. •

Calculate the Herfindahl-Hirschman Index (HHI) of each market. Interpret your results. •

Which one of the two methods of market concentration above is more robust (accurate)? Justify your answer.