Microeconomics Answers

A consumer consuming two commodities X and Y has the following utility function U=XY+2X. If the price of the two commodities are 4 and 2 respectively and his/her

budget is birr 60. (2pts)

A. Find the quantities of good X and Y which will maximize utility.

B. Find the MRSxy at optimum.

Aconsumer consuming two commodities x and y has the following utility functions U= xy + 2z. If the price of the two commodities are 4 and 2 respectively and his/her budget is birr 60.

Find the quantities of good x and y which with miximize utility

Find the MRSxy at optimum

Explain the background of Proton and Honda

Imagine a society that produces “guns” (military goods) and “butter” (consumer goods).

(1) Please draw a PPF for guns and butter, using the concept of opportunity cost.

(2) Suppose that the society has two political parties, called the Hawks (who want a strong military and the Doves (who want a smaller military). Show a point on your PPF that the Hawks might choose and a point that the Doves might choose.

Draw and explain a production possibilities frontier for an economy that produces milk and flowers. What happens to this frontier if a disease kills half of the economy’s cow?

define the term production possibility frontier

1.     Do you know the assumptions which underlay the consumer’s preferences? Explain them.

Given the following information on price of Maize flour (MF) 10$, the price of Rice (R) as 15$ and income of consumer 150$ when the consumer needs to maximize his utility function  

Analyze the following graph on consumer behavior, through

a.      Explaining the line/curve A and C.

b.     Explaining what the movement from point D to B means theoretically, express that movement mathematically.

c.      Showing where is the equilibrium of consumer? Explain it.

d.     Finding the value of point F and E.

The cost of sunflower seeds has increased. Sunflower seeds are an input when sunflowers are produced. Explain verbally how this change will affect the market for sunflowers. You are allowed to use a diagram to explain your answer, but you will only be allocated marks for the correct verbal explanation.

What is cost of production?

explain the background of the two companies