Microeconomics Answers

Suppose you are considering the labor market and the production function. Show graphically what happens to wages, output, and employment if a significant portion of the population starts to not enter the labor force as more and more people are going to college after high school?

Use the following information about the labor market:

N=100-6W

N=28+3W

Y=A*K^.5N^.5

a)      Graph each of these curves. Make sure to completely label the graph and indicate which curve is the labor supply and which is labor demand.

b)      What is the market-clearing wage? Suppose that no worker is willing to work for less than $0. What are the employee and employer surpluses?

c)      Suppose that A=1 and K=4. Graph the production function. Given the number of workers you found in b) what is the output that is produced?

d)      Supposed that the government wants to help the poor. To do this they institute a minimum wage $1 higher than the wage you found in b). Show this graphically. How many workers will be hired? What are the employee and employer surpluses? Does this policy on average help employees? What will be the output produced?

Jerry has $12 a week to spend on yogurt and maga￾zines. The price of yogurt is $2, and the price of a

magazine is $4. 

1. List the combinations of yogurt and magazines

that Jerry can afford. Draw a graph of Jerry’s

budget line with the quantity of magazines plotted

on the x-axis.

2. Describe how Jerry’s consumption possibilities

change if, other things remaining the same, (i) the

price of a magazine falls and (ii) Jerry’s income

increases.

Use the following data to work Problems 3 to 9.

Max enjoys windsurfing and snorkeling. Max has $35 a

day to spend, and he can spend as much time as he

likes on his leisure pursuits. The price of renting equip￾ment for windsurfing is $10 an hour and for snorkeling

is $5 an hour. The table shows the total utility Max gets

from each activity.

Total Total

Hours utility from utility from

per day windsurfing snorkeling

1 120 40

2 220 76

3 300 106

4 360 128

5 396 140

6 412 150

7 422 158

3. Calculate Max’s marginal utility from windsurf￾ing at each number of hours per day. Does Max’s

marginal utility from windsurfing obey the prin￾ciple of diminishing marginal utility?

4. Calculate Max’s marginal utility from snorkeling

at each number of hours per day. Does Max’s

marginal utility from snorkeling obey the princi￾ple of diminishing marginal utility?

5. Which does Max enjoy more: his 6th hour of

windsurfing or his 6th hour of snorkeling?

Utility-Maximizing Choice (Study Plan 8.2)

6. Make a table that shows the various combinations

of hours spent windsurfing and snorkeling that

1. The dean of a college faces the following costs: graders, faculty, classroom space, and chalk. Of these costs, which are likely to be variable in the long run? (5 Marks)

2. Suppose that you and your roommate have started a Bread delivery service on campus. 

a. List some of your fixed costs and describe why they are fixed. (5 Marks)

b. List some of your variable costs and describe why they are variable

Is there a trade-off between freedom, happiness and income equality

 During a coffee-room debate among several young M.B.A.s who had recently graduated, one of the young executives flatly stated, “The most this company can lose on its Brazilian division is the amount it has invested (its fixed costs).” Not everyone agreed with this statement. In what sense is this statement correct? Under what circumstances could it be false? Explain

A firm operating under perfectly competitive market has a cost function of TC= 1/₃ Q³-Q²+10Q and market price =10 birr. Therefore, Find

1)     Level of output which maximizes profit of the firm

2)    Total Revenue(TR) 

3)     Total Cost(TC)

4)     Profit of the firm

5)    Shut down price and what is your decision as a manager based on your profit analysis.

Question 1:

Mr Jones has a weekly income of $100 which he spends entirely on two goods, Coffee (C) and Biscuits (B). The price of Coffee is $1.25/jar and the price of biscuits is 50 cents/packet.

a)     Identify the weekly budget constraint faced by Mr Jones and calculate the slope of the weekly budget constraint. Draw a graph of Mr Jones budget line with the quantity of biscuits on the x-axis. Show your working.

b)    Draw an indifference curve consistent with Mr Jones maximising his well-being at a level of consumption of Biscuits of 50 packets per week.

c)     Reproduce your diagram and show the effect on Mr Jones’ budget constraint of an increase in the price of Biscuits from 50 cents/packet to 75 cents/packet.

Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of RM60,000 annually. Last year you earned a total revenue of RM100,000. Rent and supplies last year were RM50,000. 

Calculate:

a) annual economic cost,

b) annual economic profit,

c) annual accounting profit.

d) based on the above information, describe the condition of your firm

Suppose USA has a high average wage level and a high level of output per person, while China has a low average wage level and low level of output per person. Which Country can benefit from trade?