Microeconomics Answers

A production function is given by Q =10E½K½ where Q is output, E is number of workers and K is capital inputs used. 

The marginal product of labour (MPE) is ______________________.

a.

MPE =K/2E

b.

MPE = 5K½/E½

c.

MPE = 5E½/K½

d.

MPE = ½K½/E½

e.

MPE = ½E½/K½

A production function is given by Q =10E½K½ where Q is output, E is number of workers and K is capital inputs used. 

The marginal product of labour (MPK) is ______________________.

a.

MPK =K/2E

b.

MPK = 5K½/E½

c.

MPK = 5E½/K½

d.

MPK = ½K½/E½

e.

MPK = ½E½/K½

Having spent the equivalent of a thousand dollars or so on the airline tickets, hotel room, and concert tickets, should the couple actually go to the Red Hot Chili Pipers concert? Use sound economic reasoning to explain your answer. In particular, identify the concept that is the basis for your answer; explain that concept in general; and then apply that concept to this particular situation. 

People who commit bank robberies must make the decision to rob banks. That decision comes with a built-in dilemma: every minute a robber stays in the bank increases the amount of money the robber will get, but every minute in the bank also increases the likelihood that the robber will get caught.

A study of more than 5000 bank robberies between 2005 and 2007 found that the average bank robbery lasted 4 minutes and 16 seconds and yielded about $20,000. The study also found that each additional minute that robbers spent in the bank increased their haul by about $2,000.

Explain how an economically rational bank robber should determine how many minutes to spend in the bank committing the robbery. Be sure to explain the principle that a rational bank robber would apply to this decision, and how that principle would be applied.

Your company has invested $5 million in developing a new product, but the development process isn’t quite complete. You have just learned from your marketing team that other companies have introduced similar products. As a result of this competition, the expected sales of your new product once you have completed development and actually begun production is now just $3 million. Your production team tells you that it will cost another $1 million to finish development and make your product. The decision is now yours: should you give the go-ahead to complete development of the product? Why or why not? In the event that your production team’s cost estimate is inaccurate, what is the most that your company should pay to complete development? Why? Be sure to incorporate (and define) the relevant concept into your answer.

The equilibrium price of rice is Rs. 50/kg. Government imposes a ceiling price 

Rs. 40/kg. Using diagrams to show how this will impact the rice market and the 

wages of rice growers. 

Assuming that a profit maximizing monopolist faces a demand curve of  Q=20-P  and his average cost is AC=24/Q + Q

a.      Assume further that the firm practices 1^st degree price discrimination, how large is the producer surplus if the total fixed cost is sunk?

b.      Suppose price discrimination is not possible but the fixed cost is still sunk, how large is the producer surplus?

c.      Comment on the answers in (a) and (b) above

In your responses, comment on at least two posts from your peers and share an example of a company that experienced a change in revenue as the result of a change in the price of the good or service they provided. After reading your peers’ posts, explain which determinants of price elasticity of demand could be the cause of the change in demand.

Peter eats rice that costs $5 per kg and pasta that costs $10 per kg. The relative price of 1 kg of pasta is 2 kg of rice. At their current prices, Peter consumes 1 kg of pasta and 2 kg of rice. Due to some technological advances in rice cultivation, there is a fall in rice prices from $5 a kg to $2 a kg. 

A. Calculate the new relative price for 1 kg of pasta.

Q1. Consider the utility function 𝑢 = f(𝑥1… 𝑥n) where 𝑥𝑖, 𝑖= 1,2, … , 𝑛 are the quantities of the n 

goods consumed. Let the price of good 𝑥𝑖 be 𝑃i , 𝑖= 1,2, … , 𝑛. Let M be the consumer's income. Show 

that the Lagrangian multiplier of the utility maximization problem equals the marginal utility of 

income.

Are market supply curves typically more elastic in the short run or in the long run? Explain full detail.