Microeconomics Answers

Suppose that the price of commodity Y is $1 per unit while the price of commodity X is $2 per unit and suppose that an individual’s money income is $16 per time period and is all spent on X and Y. (a) Draw the budget constraint line for this consumer and (b) explain the reason for the shape and the properties of the budget constraint line in part (a).

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.

Justina owns the Just’s Sobolo Store. She charges GHS10 per bottle for her handmade sobolo. You, the economist calculated the elasticity of demand for sobolo in her town to be 2.5. If she wants to increase her total revenue, what advice will you give her and why? Be able to explain your answer. 

assuming a constant marginal of R40, what output level and price will maximize the firms profit

a.      Nestle Ghana posted a 18% increase in sales”

1. “GRIDCO plans to slash more jobs”
2. “Ghana’s Output Grew by 5.8%”
3. “Housing starts soared 10% in September”
4. “Ghana to Breach key Deficit Target it helped to create”

Explain each issue why it is a microeconomic issue

Explain diagramatically and theoretically the working of price effect, income effect and substitution effect- difference between inferior goods and Giffen goods.

calculate operating surplus and net exports

wages and salaries 2400

domestic income 4000

gross domestic fixed capital formation 1000

mixed income of self employed 400

private final consumption expenditure 2000

net factor income from abroad 200

net indirect taxes 150

government final consumption expenditure 1000

consumption of fixed capital 100

profit 500

change in stock 100

compute marginal utilities for successive units of all the goods and explain the meaning of the changes in those marginal utilities from the first point to the last

Given the following cost function, determine the underlying production function.

1 2

C(mi, w, y) = 10w wy, where y is the output and w and w, are the prices of two inputs

x and x, respectively.

The demand and supply schedule for potato chips are 

Price

Quantity Demanded

Quantity Supplied

50

1600

1300

60

1500

1400

70

1400

1500

80

1300

1600

90

1200

1700

100

1100

1800

a) Draw the graph of the potato chip market and mark in the equilibrium price and quantity. 

b) If the price is 60 cents a bag, is there a shortage or surplus in the market? How does the price will adjust?