Microeconomics Answers

The utility approach to consumer demand theory is based on the assumption of cardinal utility, while the indifference curve approach is based on ordinal utility. Which approach is better? Why.

Consider a monopoly firm that produce two products Q1&Q2. Suppose that the demands facing the firm as follow:

P1=55-Q1-Q2

P2=70-Q1-2Q2

And Tc function= 

Q1(square)+Q1Q2+Q2(square)

then optimize the profit function, determine the optimal level of output ,price and profit

Asilekpe Company Limited is considering constructing a borehole in the village of Adukofe. The 

construction would cost Gh₵2 million and there will be no cost of maintenance. The following

table shows the company’s anticipated demand over the lifetime of the bridge:

Price per gallon (Gh₵) Number of Gallons (‘000)

8 0

7 100

6 200

5 300

4 400

3 500

2 600

1 700

0 800

a. If the company were to construct the borehole what would be its profit-maximizing 

price? Would that be the efficient level of output? Explain your answer

 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 $4,000 per semester but has since gone up to $4,800. What is the elasticity of demand?

 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.

show how a producer is in equilibrium when MTRS between 2 inputs is equal to their price ratio?

How long will it take a given sum of money (say in rupees) to increase 4 times its present value when compounded half year at 7% rate of interest?

Evaluate the limits of

X² - X - 2

____________________ As X ----> 2

X (X - 2 )

1. Given the model, ( ) ( ) 0 0 – 0, 0 1 C a b Y T Y C I G T d tY a b = +   = =  + + + a) How many endogenous variables are there? b) Find the equilibrium values of Y T C

given total cost function (TC)= Q2+2Q+2 and total revenue function (TR)= 8Q-3, then calculate the A. profit maximizing level of output? B. maximum profit?