Microeconomics Answers

2. An exclusive Yoghurt manufacturer sells 4,000 gallons per month at a price of GHS 40 each. When the price is reduced to GHS 30 sales increase to 6,000 gallons per month.

a. Calculate the price elasticity of demand for the Yoghurts over this price range.

b. Is demand elastic, unit elastic or inelastic?

c. Calculate the change in revenue due to the change in price.

If the percentage change in the quantity demanded of a commodity A is 50% and the percentage change in the price of commodity B is 33.33% determine the coefficient of elasticity and what type of commodities are comodity A and B

find the Marshallian demand funtions for commodity x and y

In the demand function Q=P^-0.4 , calculate price elasticity of demand and identify type of good

Given that Rumbi's budget line is 25=1/4Qcake+Qtea and the price of tea is R10. What is Rumbi's income and price for cake?

Terry’s utility function over leisure (L) and other goods (Y ) is U(L, Y ) = Y + LY. The associated marginal utilities are MUY = 1 + L and MUL = 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)

Chicken (C) and pork (P) are substitutes. In the short run the quantity of chicken and

pig are assumed fixed at 100 and 200 respectively. Suppose their demand function are given

as

(a) What are the equilibrium price of chicken and pork?

(b)Suppose an outbreak of chicken disease causes quantity of chicken to

decline by half. How does this affect chicken and pork prices?

Write up an essay in 300-400 words

'Importance of microeconomics in business decision making.'

examine the significance of price elasticity of demand for the decision making of firms and government.(15 marks)

DBS Farms is a producer and retailer of farm products. DBS main products are Mangoes,

Pawpaw and Pineapples. The current price of the Mangoes per Kilogram is GHS 50, the

Pawpaw/Kg is GHS 80 and the Pineapple is GHS 40. This year the DBS Farms sold 10,000

kgs of Mangoes, 20,000 kgs of Pawpaw and 1 million kgs of Pineapples. In an attempt to

improve revenue, the managers of the firm have decided to increase all prices by 10%.

Market research has suggested that the price elasticity of demand for each product is:

Mangoes: - 1.5; Pawpaw: -2.5; Pineapples: - 0.6. You have been asked to evaluate the

planned price increases.

a. Comment on the planned price changes.

b. Would a 10% price reduction have been better for some or all of the products?