Microeconomics Answers

Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000. The firm has an accounting profit of:

a)     $500,000 and an economic profit of $200,000

b)     $400,000 and an economic profit of $200,000

c)     $300,000 and an economic profit of $400,000

d)     $200,000 and an economic profit of $500,000

Consider the following cost and revenue structure for Pristine Tea, a shop that specialiяes in

selling green tea.

 What is the market structure of this question? Monopoly, perfect competition or monopolistic competition. Besides, the profit maximiяing levels of output is 6 and the profit maximiяing levels of price is 9 and my marginal revenue and marginal cost is 9. Can it be allocative efficiency and productive efficiency?

Supply and demand for a certain type of garden hose follow the equations below. The market is initially in equilibrium at p* = $32 and X* = 80. With a tax of $2.10, what price will buyers pay for garden hoses? (25 points)

Demand: X = 40,960p^-1.8                                    Supply: X = 56 + 0.75p

Suppose that the current production function for workers at McDonald's (L) in producing Hamburgers (H) is given by H = L. Now, suppose that McDonald's believe in the efficiency wage theory. What would be a plausible NEW production function for McDonald's workers after implementing an efficiency wage?

1)There are three possible short-run profit outcomes (Break-even point, economic profit and

economic loss) in a perfectly competitive market.

a) Draw all three possible short-run profit outcomes and explain in your own words. (5)

3. a) Why does a single-price monopoly produce a smaller output and charge more than the

price that would prevail if the market were perfectly competitive? (3)

b) How does a monopoly transfer consumer surplus to itself? (2)

2.a)Define economies of scale and diseconomies of scale with diagram. (2)

A positive information concerning a particular product which results in an increase in demand will result in equilibrium price to do what

Supposed you are the producer of spinach, carrots and beetroot and you are in a position to decide at which price you will offer these products for sale. What will be your pricing strategy for each of these products order to increase their total revenue? In your analysis you found that the price elasticity of demand for spinach is 0,4, for carrots is 1,0 and for beetroot is 1,2. Explain the decision in each case

What is the effect of a N$1 specific tax on equilibrium price and quantity if demand is perfectly inelastic?

If the government imposes a tax equal to the external cost at each level of production, what price would be charged if 400tons are produced

Due to the COVID-19, the price of hand-sanitizer increases from 150 taka to 250 taka. In response, the

 quantity demanded declines from 20 units to 15 units.

 (a) Calculate the price elasticity of demand.

Question 2.

 (b) Explain if the demand is elastic or inelastic. Based on the elasticity, what change (increase,

 decrease, or keep it the same) in price the seller can do to maximize his total revenue? Explain your

answer.