Microeconomics Answers

1.     Complete the following table.

(i)    Find out the total product (TP), average product (AP), marginal product (MP) and draw a graph of TP, AP, MP and also explain the stage of production.

(ii)  if the fixed price of land is 1000 and firm pay 750 to each worker then calculate, Fixed cost, variable Cost, Marginal Cost, Average variable Cost (AVC), Average Fixed Cost(AFC), and Average total cost(ATC).

Labor

Total Product

Average Product

Marginal Product

0

0

1

8

2

18

3

25

4

30

5

33

6

34

1.     Suppose a consumer has income of 1000, and buys pizza and coke. The price of pizza is 100 and price of coke is 50. 

(i)    Draw a budget line that represents the set of bundles this individual can afford if they use all their income. (Put movies on the X axis). Label the places where the budget line intercepts each axis and the slope of the line.

(ii)  Suppose that in consumer equilibrium this individual consumes 7 pizza and 6 coke. What rules must hold in consumer equilibrium? Label this bundle in your drawing (call it point “A”). 

(iii)Draw an indifference curve associated with this bundle, and explain how its slope at the equilibrium point relates to the slope of the budget line.

Terry’s utility function over leisure (L) and other goods (Y ) is U(L, Y ) = Y + LY. The associated marginal utilities are MU_Y = 1 + L and MU_L = Y. He purchases other goods at a price of $1, out of the income he earns from working. Show that, no matter what Terry’s wage rate, the optimal number of hours of leisure that he consumes is always the same.

(a)   What is the number of hours he would like to have for leisure? (1 marks)

(b)  Determine the MRS of leisure for labour (2 marks)

(c)   Draw a leisure-influenced labor curve (2 marks)

it is estimated that more than 2000 students will apply mba in malaysia this year. using the concept of net present value (npv) and opportunity cost, explain when it is rational for an individual to pursue the mba program

Consumer surplus indicates what?

hector has 2000$ a month to spend on clothing and food. the price of clothing is $50 and the price of food is 20. the clothing and food pairs in hector's choice include units of clothing and units of food

Land has been a huge debate in south Africa over the past 10 years with the EFF pushing for a land redistribution to all South African citizens. Without a doubt, many people in townships have created jobs and streams of income through invention of small businesses in their yards (i.e Residence, crèche, tarvens and Spazas). Critically discuss the impact of land use regulations on the formalization and sustainability of these small business.

if total revenue increase price will also increase?

A bakery shop sells fresh baked bread from 5 a.m. until 3 p.m. every day. Any bread not sold by the end of the day is thrown away. The bread packet cost Rs.8 to produce and the bakery is selling a dozen bread is at Rs.10.00.Since this shop does not sell old bread the next day, what minimum price the bakery should charge if he still has 10 dozen left at 2:30 p.m.?

change in the demand of cold drinks from 700 units to 1000 units because of the fall in the price from Rs 15 to Rs 10. Calculate the price elasticity of cold drinks