Microeconomics Answers

Suppose that, as part of an international trade agreement, the Zambian government reduces the tariff on imported fish. Will this affect the supply or the demand for Fish? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of Fish? Explain your reasoning.

Sue’s Shoe Shop is having a sale on shoes. The first pair of shoes is full price, the second is 25% off, and the third is 50% off. Describe how this sale relates to individual demand and marginal utility.

 Given the total cost function TC = 18q

2

+ 4q + 16,200

(a) Find marginal cost (MC) and average coat (AC) as functions of q

(b) Show that when MC < AC, AC is falling, and when MC > AC, AC is rising

A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets.

Scenario 1: Suppose that, as part of an international trade agreement, the Zambian government reduces the tariff on imported fish. Will this affect the supply or the demand for Fish? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of Fish? Explain your reasoning.

Scenario 2: Suppose the Ministry of health publishes a study finding that Fish reduces the probability of getting Corona Virus. How do you imagine this will affect the market for Fish? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of Fish? Explain your reasoning.

A.   Imagine that tuition for your schooling has increased by 20%. How do you think this will affect demand and consumer behavior? Why? How would you describe the elasticity of your tuition? Explain. (Describe the elasticity of tuition.)

B.     Imagine that there are currently 10,000 students enrolled at your institution. The school decides to increase tuition, and enrollment falls to 9,000. Tuition started at K4, 000 per term but has since gone up to K4, 800. What is the elasticity of demand? (Explain how an increase in tuition will impact demand and consumer behavior. Solve for the elasticity of demand)

C.    How will this impact total revenue for your institution? What inferences can you make from this information? (Explain the impact of the tuition increase on total revenue)

Liquid portion of a diet is to provide at least 300 calories, 36 units of vitamin A and 90 units of vitamin C daily. In an environment with very hot conditions, a cup of dietary X provides 60 calories, 12 units of vitamin A and 10 units of vitamin C. A cup of dietary Y provides 60 calories, 6 units of vitamin A and 30 units of vitamin. Suppose that dietary drink X costs R0.12 per cup and drink Y costs R0.15 per cup.

What is the objective function?

A consumer has the utility Function U= X^2/3Y^3/5. The share of income that this consumer Spends on good X is (approximately) given by:

must a consumer purchase some quality of each commodity to be in equilibrium?

What is the relationship between two goods of the marginal rate of substitution between them is zero or infinity

Are indifference curves useless because it is difficult to drive them experimentally