Microeconomics Answers

Given the following demand equation P = 60- 2Q and the cost equation TC(q) = 100+3Q2

For the market of shoes

a.If the enterprises in this market take advantages of perfectly competitive market, find the equilibrium outputs and price.

b.If the seller in this market takes the advantages of pure monopoly, find the equilibrium outputs and price.

c.If the seller in this market takes the advantages ofoligopolistic market, find the equilibrium outputs and price.

a. Why would afirmthat incurs losses choose to produce rather than shut down?

b. The supply curve for afirmin the short run is the short-run marginal cost curve (above the point of minimum average variable cost). Why is the supply curve in the long runnotthe long-run marginal cost curve (above the pointof minimum average total cost)?

c. In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?

4.Given the following demand equation P = 60- 2Q and the cost equation TC(q) = 100+3Q2

For the market of shoes

a.If the enterprises in this market take advantages of perfectly competitive market, find the equilibrium outputs and price.

b.If the seller in this market takes the advantages of pure monopoly, find the equilibrium outputs and price.

c.If the seller in this market takes the advantages ofoligopolistic market, find the equilibrium outputs and price.

1.a. Why would a firm that incurs losses choose to produce rather than shut down?

b. The supply curve for a firm in the short run is the short-run marginal cost curve (above the point of minimum average variable cost). Why is the supply curve in the long run not the long-run marginal cost curve (above the point of minimum average total cost)?

c. In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?

Acme tobacco is currently selling 5,000 pounds of pipe tobacco per year.Due to competitive pressures, the average price of a pipe declines from $15 to $12. As a result, the demand for Acme pipe tobacco increases to 6,000 pounds per year.

a) What is the cross elasticity of demand for pipes and pipe tobacco?

b) Assuming that the cross elasticity does not change, at what price of pipes would the demand for pipe tobacco be 3,000 pounds per year? Use $ 15 as the initial price of a pipe

Use a well labelled diagrams to show how production Isoquant can be used to explain:

1)Increasing returns to scale

2)Constant returns to scale

3)Decreasing return to scale

What does consumer surplus indicates?

What does a production frontier shows?

b) With proper examples draw a distinction between mathematical and econometric model?

Explain, using a supply and demand graph, how a freeze in a vegetable crop will affect the equilibrium price and quantity.

Acme Tobacco is currently selling 5,000 pounds of pipe tobacco per year. Due to competitive pressures, the average price of a pipe declines from $15 to $12. As a result , the demand for Acme pipe tobacco increases to 6,000 pounds per year.

a) what is the cross elasticity of demand for pipes and pipe tobacco?

b) Assuming that the cross elasticity does not change, at what price of pipes would the demand for pipe tobacco be 3,000 pounds per year? Use $15 as the initial price of a pipe.