Microeconomics Answers

a. Analyse the cross price elasticity of demand for wheat and rice when a change in the price of wheat from Rs.70 to Rs. 90 results in a change in the quantity demand for wheat from kg 3000 to kg 5000 in the market. Interpret the value of the coefficient.

Analyse the cross price elasticity of demand for wheat and rice when a change in the

price of wheat from Rs.70 to Rs. 90 results in a change in the quantity demand for

wheat from kg 3000 to kg 5000 in the market. Interpret the value of the coefficient.

Analyse the cross price elasticity of demand for wheat and rice when a change in the

price of wheat from Rs.70 to Rs. 90 results in a change in the quantity demand for

wheat from kg 3000 to kg 5000 in the market. Interpret the value of the coefficient.

the smith company made and sold 10,000 metal tables last year. when output was between 5,000 and 10,000 tables, its average variable cost was $24. in this output range, each table contributed 60 percent of its revenue to fixed costs and profit. what was the price per table?

Derive

the MU function from the following TU function:

𝑇𝑈 = 200𝑄 − 25𝑄2 + 𝑄3

From this MU function, draw up a table up to the level of Q where MU becomes negative. i.e (Q = 1, 2, etc). Graph these figures. (10 marks)

Suppose that the Ontario government is concerned that people are drinking too much alcohol

“Suppose that the policymakers increase taxes on certain luxury goods that changed consumer’s buying behavior and they started spending less on such goods”. Given example most closely illustrates which principle of microeconomics?

QUESTION 30

The end of the telephone monopoly brought:

1. A wave of innovation aimed at attracting and pleasing customers.
2. Lower prices.
3. A greater quantity of services.
4. All of the above.
5. The end of the world.

QUESTION 31

Monopoly sellers often see:

1. Overly grateful consumers.
2. Threats to their superior marketplace position.
3. No threats to their superior marketplace position.
4. Only economic losses.
5. The error in their ways.

QUESTION 27

Monopolies do not supply enough output:

1. Causing a shortage in the market.
2. To satisfy the demand for their product.
3. To be allocatively efficient.
4. To be profitable.
5. To warrant consideration. 

QUESTION 28

The price is a measure of:

1. Efficiency.
2. Efficacy.
3. How much buyers can afford.
4. How much buyers value the product.
5. How much the government feels should be charged.

QUESTION 29

Monopolies may bank their profits:

1. And slack off on trying to please their customers.
2. But cannot slack off on trying to please their customers.
3. Only if they impress the sellers.
4. Only if the sellers are satisfied.
5. Whenever the government prohibits it.

QUESTION 23

If the marginal revenue exceeds the marginal cost, then:

1. The firm should produce the extra unit.
2. The firm should reduce its level of output.
3. The firm should shut down completely.
4. The firm should contact its competitors.
5. The firm should apply for tax exemptions.

QUESTION 24

For a monopolist, marginal revenue:

1. Is constant.
2. Is continuously increasing.
3. Is higher than the price.
4. Is not equal to the price.
5. I give up! 

QUESTION 25

The monopolist will charge:

1. Less than the socially optimal price.
2. Exactly the socially optimal price.
3. Less than firms in perfect competition would.
4. What consumers are willing to pay.
5. Every single individual their own unique price.

QUESTION 26

As a monopolist’s output increases, marginal revenue:

1. Eventually becomes positive.
2. Increases
3. Increases proportionately.
4. Increases disproportionately.
5. Decreases.