Microeconomics Answers

Which one of the following is NOT a major source of spending in the economy?

Households

Banks

Firms

Government

The foreign sector

Why would a firm choose to operate at a loss in the short run?explain carefully

Why would a firm choose to operate at a loss in the short run?explain carefully

Why is the price elasticity not calculated for all the quantity and how did we get 0.5 in the solution

Suppose that an industry is dominated by a single producer, the demand for it's product is Q=300-6p. Suppose further that TC=100+5Q+1/480Q×2 is the cost function of the firm.

What is the equilibrium quantity and price in this market given this information

Donald derives utility from only two goods, carrots (X) and donuts (Y).

 His utility function is as follows: U(X,Y) = X^1/4Y^3/4. Donald has an income (M) of $120 and the price of carrots (P_X) is $2 while the price of donuts (P_Y) is $6. What quantities of carrots and donuts will maximize Donald's utility? How does MRS_XY change as the firm uses more X, holding utility constant



 There are only two farmers in Machakos producing milk. The local demand for milk is given by an inverse demand curve Q=1000-0.5P (P denotes price, Q denotes the total quantity). Both farmers have the same cost function given by C = 560Q + 80,000. Calculate the Cournot-Nash equilibrium. That is

(a) Output for each firm

(b) Total output (Q)

(c) The price (P)

(d) The profit for each firm

Catalina Films produces video shorts using digital editing equipment (K) and editors (L).

 The firm has the production function where Q=K^1/5L^4/5 where Q is the hours of edited footage. The wage is $160, and the rental rate of capital is $40. The firm wants to produce 3,000 units of output at the lowest possible cost. Find the least costly combination of labor and capital to produce 3000 units 

Suppose that an industry is dominated BT a single producer, the demand for it's product is Q=300-6p.suppose further that TC=5Q+1/480Q×2 is the cost function of the firm

Suppose that the Market for Cigarette is facing the Demand function Q = 20 – 2P and Supply function Q =

10.5 + 0.5P:

a) What is the effect on the Equilibrium Price and Quantity when Government imposes a 7% of tax as

percent of equilibrium price on each unit of Cigarette produced? [5