Microeconomics Answers

Suppose that a market is described by the following supply and demand equations:

*QS = 2P*

 *QD = 300 – P*

*a.* Solve for the equilibrium price and the equilibrium quantity.

*b.* Suppose that a tax of T is placed on buyers, 

so the new demand equation is

*QD = 300 – (P + T).*

 Solve for the new equilibrium.

*c.* Tax revenue is T × Q. Use your answer to 

part *(b)* to solve for tax revenue as a function 

of T. Graph this relationship for T between 0 

and 300.

*d.* The deadweight loss of a tax is the area of 

the triangle between the supply and demand 

curves.Recalling that the area of a triangle 

is 1⁄2 × base × height, solve for deadweight 

loss as a function of T. Graph this relationship ship for T between 0 and 300.

*e.* The government now levies a tax on this 

good of $200 per unit. Is this a good policy? 

Why or why not? Can you propose a better policy?

How to find Q when number of labour = L given in the sequence Q= 6L×L - L×L×L

Suppose the (inverse) daily demand for oil is given by , where  denotes millions of barrels of oil and  is the price per barrel of oil.

The marginal private cost of extracting oil is given by . Oil extraction gives rise to environmental pollution, such that the marginal social cost of extracting oil is given by .

Suppose the (inverse) daily demand for oil is given by , where  denotes millions of barrels of oil and  is the price per barrel of oil.

The marginal private cost of extracting oil is given by . Oil extraction gives rise to environmental pollution, such that the marginal social cost of extracting oil is given by .

A competitive firm has the following cost function C=y² for producing output y. There are 100 firms all behaving competitively.

a) what is the is the individual firms supply curve for milk

b) What is the market supply of milk

c) Suppose the demand curve for milk is estimated to be y=200-50p

What is the equilibrium price and quantity sold?

Suppose the (inverse) daily demand for oil is given by P= 130 - Q , where Q denotes millions of barrels of oil and P is the price per barrel of oil.

The marginal private cost of extracting oil is given by MPC= 10 + Q. Oil extraction gives rise to environmental pollution, such that the marginal social cost of extracting oil is given by MSC= 10+2Q

(a) Find the daily production and price of oil if the market for oil extraction is perfectly competitive.

(b) Find the socially optimal production and price of oil and explain why it differs from the market outcome in (a).

(c) Find the daily production and price of oil if there is a monopoly oil company and comment on your answer. [6 marks]

(d) Illustrate your answers to (a), (b) and (c) in one diagram with Q on the horizontal axis and P on the vertical axis.

(e) Does the monopoly oil company generate a deadweight loss? Is monopoly justified in this market?

(a) Describe the costs and benefits of intalling solar panels in Darwin. Describe the externality that arises from the use of solar panels in Darwin. What is the best way to avoid or regulate externalities? Discuss.

(b) Draw a graph to illustrate how solar panels have an impact on social welfare. Use the concepts of allocative and social efficiency

(a) What are the major drivers of rising house prices in Darwin. 

(b) Using an appropriate diagram, explain your answer in part

c) How will the widespread availabilty of vaccines impact the housing market in future.

Explain the drivers of rising food prices in Australia. Use the concept of elasticity to explain the changes in equilibrium price and quantity

Qx 0 1 2 3 4 5 6 7

TUx 0 4 14 20 24 26 26 224

a. Derive the marginal utility schedule.

b. Plot the total and the marginal utility schedules.

c. Determine where the law of diminishing marginal utility begins to operate.

d. Find the saturation point.

Use a diagram to explain the impact of the imposition of a minimum wage above the equilibrium wage in a perfectly competitive market