Microeconomics Answers

How is short run defined in production theory and does it differ from the long run?.

.If marginal revenue is greater than marginal cost:

A. it will pay the firm to expand production.

B. the firm should leave the level of production unchanged.

C. the firm should cut back on production.

D. profit is at a maximum.

E. only normal profit will be possible.

Why is scarcity a fundamental problem in economics

Explain four reasons why the study of Economics is important to society.

Define labour

Define labour

Use the following information to answer questions 1.2 to 1.4:

Suppose the demand for a product can be represented by Qd = 100 – 5P, while

the supply is given by the equation Qs = –12 + 3P, where price is in rand. Determine the equilibrium price and quantity

Q1.Using the indifference curve approach, with movies on the vertical axis and concerts on the horizontal axis, illustrate a situation where the law of demand is violated. i.e decreases in the price of movies lead to decreases in the quantity demanded of movies.

Q2.With the quantity of popcorn on the vertical axis and ice cream on the horizontal axis, draw indifference maps to illustrate each of the following situations:

I.Leoni's marginal rate of substitution between ice cream and popcorn remains constant, no matter how much ice cream she consumes

II.Heather loves ice cream but hates popcorn

III. When Andy eats ice cream, he tends to get addicted: I.e. the more he has, the more he wants and he is willing to give up more and more popcorn to get the same amount of additional ice cream.

Consider the following equation:Qd=100-3p and Qs=0.5-100

The objectives of virtually all tax systems can be classified into two broad categories namely Revenue and Non-Revenue goals.

Some of the non-revenue goals incorporated in our current tax regime include Stabilization Function, Economic Growth Function, Redistribution of Income Function, and Allocation Function.

Critically assess the contribution of the above policies in safeguarding the micro and macro-economic objectives of a nation.