Microeconomics Answers

Is price competition more likely when demand is price elastic or price inelastic? Explain why.

Suppose the following table given below describes the production possibilities of RICE and THREADS for FINLAND and JAPAN:

RICE (Kg's/hour) THREADS (Meters/hour)

FINLAND 15 20

JAPAN 20 70

1. Without trade, what is the relative price of RICE in terms of cloth in FINLAND?

What is the price in JAPAN?

1. Which country has an absolute advantage in the production of each good?
2. Which country has a comparative advantage in the production of each good?
3. If both countries trade with each other, which good will each export?
4. What is the range of prices at which trade can occur?

Suppose the demand and supply curves of good-X are given in Figure 1 below. (draw separate diagram for each question)

What will happen to the equilibrium price and equilibrium quantity if:

a.      Consumers’ income increases and good X is normal.

b.     Price of complement good of X increases.

c.      The cost of inputs used in the production of X increases.

d.     Both consumers’ income increases (good X in inferior) and the technological advancement reduces the cost of production of good X.

There are four consumers willing to pay the following amounts for haircuts:

A: $7 B: $2 C: $8 and D: $5

There are four haircutting businesses with the following costs;

Firm 1: $3 Firm 2: $6 Firm 3: $4 and Firm 4: $2

Each firm has the capacity to produce only one haircut. For efficiency how many haircuts can be 

given? Also find out how large will be the total surplus.

:Julie has preferences for food, F, and clothing, C, are derived by a utility function

U(F,C)=FC. Food costs $1 a unit and clothing costs $2 a unit. Julie has $12 to spend on

food and clothing.

.

a. Give the equation for Julie’s budget line. If food is on the vertical axis, what is the

slope of the budget line?

b. Graph Julie’s budget line. Place food on the vertical axis and clothing on the

horizontal axis.

Good day, Can you please advise on a GRAPH for EQUILIBRIUM quantity calculation of Qs=18000+0.2P & QUANTITY DEMANDED Calcultuon Qd=2400-0.1P

over the past 30 years , technological advances have reduced the cost of computer chips. How do you think this has affected the market for computers? For computer software? For typewriter?

Head Office is considering the placement of a ‘price floor’ for the sale of Cloud 9-branded yoghurt. The price floor will help consumers by maintaining a lower than equilibrium price. 

it's your last year of high school and you have been asked to organize the annual senior party that place your school's gym Last year, the price was $15 per person and attended plan to charge the same price this year and expect the same number of students to show upBelow is the cost of different boots you can have at party. The ones with an astensk () larger and require 20% of the area in the gym. The other booths are smaller and require % of the your to pick which booths purty

Given the aggregate consumption function C = 0.9Y + 100(where C is aggregate consumption

and Y is aggregate income)

(a) Find the marginal propensity to consume (MPC) and average propensity to consume (APC)

(b) Find the elasticity of consumption with respect to income, and show that it equals MPC/APC