Microeconomics Answers

scenario 1 for questions 11 and 12

A monopolist faces the following demand curve, marginal revenue curve and total cost curve for its product:

Q = 400 - 2P

MR = 200 - Q

TC = 10Q

11. Refer to scenario 1. What is the profit-maximising level of output?

[1] 0

[2] 10

[3] 190

[4] 200

[5] 400

12. Refer to scenario 1. How much profit does the monopolist earn?

[1] R1 900,00

[2] R19 987,50

[3] R18 050,00

[4] R19 950,00

The market demand and supply for renting apartments in the Midrand area is given as:

Demand: p = 12 000 - 5Qd

Supply: p = 800 + 3Qs

5. What is the landlord’s total revenue at the equilibrium price?

[1] R7 000 000.

[2] R12 000 000.

[3] R8 000 000.

[4] R1 400 000.

6. If the government implements an effective rent ceiling of R4 100 in the Midrand area, what are the search costs?

[1] R0.

[2] 2 640 000.

[3] 1 320 000.

[4] 72 000.

7. What price will the customers be willing to pay on the black market?

[1] R5 000.

[2] R4 100.

[3] R6 500.

[4] R1 400.

A hot dog vendor faces a daily demand curve of Q=1800-15P.

If the vendor has been selling 300 hot dogs each day. How much revenue has he been collecting?

In Ramadan the price of date rises and and quantity of date sold also rises, is this a violation of law of demand?

The next Monetary Policy Committee meeting is taking place on 18-20 May 2021. The ongoing debate at the moment is that the SARB is not doing enough to help the government with its growing debt crisis, hence there has been recalls of the institution doing more than lowering the repo rate. Is this argument justified? How would you suggest the SARB proceed, taking into consideration the current fiscus issues? Provide a short monetary policy package in light of the above mentioned situation and use practical case studies to back up your answer.

(need about 600-800 words.)

Explain the Law of demand and demand curve with relevant examples

Critically discuss the impact of land use regulations on the formalization and sustainability of these small business.

Question 3 (5 marks)

Justin has the utility function U = xy, with the marginal utilities MUx = y and MUy = x. The price of x is $2, the price of y is p_y, and his income is 40. When he maximizes utility subject to his budget constraint, he purchases 5 units of y.

(a)   What must be the price of y and the amount of x consumed? (1 marks).

(b)  Prove that this allocation follows the equi-marginal principle (2 marks).

(c)   What would be the new bundles of x, y if Px was $3 (2 marks).

Suppose that the marginal cost per trip of a ride is constant, MC = N$4, and that each taxi has a capacity of 20 trips per day. Let demand function for taxi rides be given by: D = 1200 – 20P, where demand measured in rides per day. Assume that the industry is perfectly competitive. (i) What is the competitive equilibrium price per ride? (5) (ii) What is the equilibrium number of rides per day? How many taxicab will there be in equilibrium?