Microeconomics Answers

7.1 CONSIDER THE SHORT-RUN PRODUCTION FUNCTIONS

a) Price of the Tablet (P610 Samsung Galaxy Tab-S6 Lite Octa-Core 4GB Ram 64GB Storage 

10.1 Inch Wifi with S Pen) increases from PKR 57000 to PKR 66000. Due to this change in 

price

1. What will happen with the Quantity Demanded?

2. Draw a demand curve accordingly.

3. What will happen with the Quantity Supplied?

4. Draw a supply curve accordingly?

b) In response to the above price change if quantity demanded changes 40% and quantity 

supplied changes 20%

1. Find the elasticity of demand and explain this change.

2. Find the elasticity of supply and explain this change.

What is Harry’s marginal cost of tennis if he plays 3hours a week

Maize is considered to be an inferior good. Assume that the original demand curve is D1 and the original supply curve is S1.

1.Consumer expert the price of maize to decrease in the future. Explain how this will affect the current situation in the maize market.

Maize is considered to be an inferior good. Assume that the original demand curve is D1 and the original supply curve is S1.

1.Explain the impact of an increase in the price of lucerne(a substitute in product for maize) on the market.

Maize is considered to be an inferior good. Assume that the original demand curve is D1 and the original supply curve is S1.

1.Explain the impact of an increase in income on the maize market .

2.Explain the impact of an increase in the price of rice(a substitute in consumption for maize) on the maize market.

3.Explain the impact of an increase in wages for farm labourers on the maize market.

Wages of bus drivers increase. At the same time, the incomes of consumers generally increase. In the market for bus rides, how do demand and supply curves shift? Assuming that the magnitude of shifts in the demand and supply curves is the same, what happens to the equilibrium price charged and equilibrium quantity demanded and supplied? Draw the diagram and explain.

2. The Motor Transport Authority (MTA) expects that new car sales will decrease from 48,500 cars in December to 46,950 cars in January due to 5% Value Added Tax (VAT) in 2018, which will be completely passed on to consumers. Calculate PED, state whether it is elastic or inelastic, and, state what manufacturers and dealers should do to maximize revenue.

How do the assumption or axioms of monotonicity and convexity contribute to give us a well behaved preferences ?