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Q. Given the demand and supply equations: Qxd=s-kPx-jM, Qxs=-h+bPx + cW where represents income and represents the wage rate:

·  Calculate the impact of a change in income on the equilibrium price and quantity.

·  Will this impact be larger or smaller if the value of is decreased?

Draw diagram(s) indicating all results



Given the functions: ATC= x-6+(30/x) and AR =10+(15/x), where x represents output, find TC, TR, and the output level when net revenue is zero.

Which constitutional command states that criminal laws can treat groups of people and types of conduct differently only if the different treatment is reasonable?


Market surveys show that there are two types of consumers for frozen yogurt. The first type like frozen yogurt and have an inverse demand curve of P =5 − 21Q. The second type is crazy about frozen yogurt and has an inverse demand curve of P = 20 − Q. In the town of Smallville, there are only 2 consumers: one of them likes frozen yogurt and the other is crazy about frozen yogurt.


Using the individual demand curves above, derive the market demand for frozen yogurt in Smallville. Plot the market demand curves.


2. Suppose that the market supply for frozen yogurt in Smallville is given by QS = 2+P. Find the equilibrium price and quantity. How much does each consumer buy at the equilibrium price?


if 0 > ex,p -1 where ex,p is own price elasticity of demand then the demand is what. price and total spending move in which direction?


utility function of Mr Olover who like 1/3 cup of milk (m) with 3/4th cup of tea (t) can be write as?


Suppose that the supply and demand for good H is described by the following equations:


QS= - 150+0.40P


QD = 600-0.2P


The production of H also creates marginal external costs of $165 per unit of H. Assuming that H is sold in

a competitive market, what is the market price? How many units of good H will be produced per year at

that price? What is the socially efficient output of H? Will taxing H @12.5 percent be socially optimal?

What alternate tax policy you can suggest to achieve social efficiency? Also calculate the incidence of each

of the taxes.


Suppose that the supply and demand for good H is described by the following equations:

Q S= - 150+0.40P


Q D = 600-0.2P


The production of H also creates marginal external costs of $165 per unit of H. Assuming that H is sold in

a competitive market, what is the market price? How many units of good H will be produced per year at

that price? What is the socially efficient output of H? Will taxing H @12.5 percent be socially optimal?

What alternate tax policy you can suggest to achieve social efficiency? Also calculate the incidence of each

of the taxes.


The demand curves for good X of three consumers (A, B and C) are given by the equations:

Q Ad = 100 – 0.2x


Q Bd = 300 – 0.5Px and

Q Cd = 500 - 0.8P

The market supply curve for X is: MCx =50+8.5Q. Determine the market equilibrium if X were a private

good. Will the market equilibrium be the same/different if X were instead a public good? Why? In case X

is a public good, determine the tax share of each individual using the benefit principle of taxation. Draw

graphs to illustrate your answer.

b) Using the information on demand and costs given in part (a), explain what might happen if individual B

volunteers to provide this good for all. Draw graphs and explain.

Q.2 Using the information in Q.1, suppose that:

(i) Individual C states that his marginal benefit is 250.

(ii) Individual A states that his marginal benefit is 100.

Calculate their Clarke tax liability. Also show each case using an appropriate diagram.


An individual earns wage income (W) at the rate of Rs. 30,000 per month. He also owns physical assets 

that were worth Rs. 600,000 at the beginning of the fiscal year but now have a market value of 690,000. 

The individual’s income tax liability is determined under a proportional tax system (with ATR = MTR = 

7.5% ) on the basis of his net worth at the end of the fiscal year. He is also subject to paying wealth tax @ 

2% per annum and a capital gains tax @ 1.5% per annum. Calculate total tax liability of the individual 

when the tax system allows for 

(a) zero inflation, and 

(b) 12% inflation.

On the basis of your calculations, explain what is the correct way of taxing capital gains in the presence of 

inflation?


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