Microeconomics Answers

What is demand in economics

monopoly firms ability to set its price is limited by the the demand curve for its product and in particular price elasticity of demand for its product do you agree? explain using illustration

1.      Assume that consumer A consumes two products Q₁ and Q₂  when the first product price increases, the consumer decided to decrease for the second product? Explain

2.      Given that the profit function for a firm p = 150x + 4x² – xy – 9y2 + 100y + 2x + y = 50 with a constraint of 2x + y = 50. Determine the amount of x and y which maximizes profit. A. Using the substitution method  B. Using the language method

1.       Assume that you are working in one of the profit marking firm in town as a research and planning expert. Your organization faces a cost function of C(Q) = 3Q² + 10Q + 50; and the demand function for the product the firm produces Q = 125 - 5P. If your firm is going to a pricing decision which enable it to maximize its profit. How much price you are expected to advice for the decision maker?

2.      A firm faces a non-linear demand function of P = 250 - 3Q₁³ - Q₁² + Q₂²  + Q₁ - Q₂ for two products is the same. Compute the marginal revenue for each product. 

1.      Below are a set of nested indifference curves reflecting consumer preferences between good A and good B. The red curve represents a greater level of utility for consumers than that attained at any point on the blue curve. Which of the graphs is not possible for a field of indifference curves?

Q4: Give some real life examples for the “law of demand”.

. Does a change in consumers’ tastes lead to a movement along the demand curve or a shift in the demand curve? Does a change in price lead to a movement along the demand curve or a shift in the demand curve

4.Suppose one consumer wants to purchase clothes and books. Choose the necessary information to study the consumer’s choice.

(a) income of the consumer

(b) price of cloth

(c) price of books

(d) preferences of the consumer

(e) all of the above 

Q. No. 1: Explain market equilibrium along with graph and diagram.

(a) Equal fall in demand and supply

(b) 25% increase in demand while 10% fall in supply (c) 30% increase in taxes and 20% increase in income (d) Rise in demand is more than rise in supply

(e) 40% fall in sales tax while 20% decrease in income

Government price controls can short-circuit the market’s information transmission function. Discuss using appropriate figures.