Microeconomics Answers

Suppose there are two profit maximizing firms 1 and 2 producing q1 and q2 units respectively of a homogeneous good. The marginal cost of production for the firms 1 was c and firm 2 was d. The inverse demand function for this good is p = 1 – Q, where p is the price and Q = q1 + q2 is the total output produced by these firms. Suppose the firms choose their outputs simultaneously. In equilibrium, outputs chosen by the firms are:

A) (q1, q2) = ((1-2c- d)/3, (1-2d- c)/3)

B) (q1, q2) = ((1+2c+ d)/3, (1+2d+ c)/3)

C) (q1, q2) = ((1-2c+d)/3, (1-2d+ c)/3)

D) (q1, q2) = ((1+c+ d)/3, (1+d+ c)/3)

Consider a firm in a competitive industry with the production function Y = max {K, L}, where Y denotes the quantity of output, and K and L denote the amount of capital and Labour used. Suppose w is the wage rate for per unit of labor employed and r is the rent for per unit of capital such that r > w. The Expansion path is given by

Pizza My Kidney requires both labor (L) and capital (K) to make pizzas. Labor costs $4 per unit and capital costs $1.50 per unit. The production function for this company is F (L,K) = L^3/4 K^1/5. If capital is fixed in the short-run at 32 units, what is the minimum cost required to produce 54 units.

Assume that a college student purchases only Red Bull and Mars bars the substitution effect associated with a decrease in the price of a mars will result in:

A An increase in the consumption of Mars and an increase in the consumption of Red Bull.

B An increase in the consumption of Mars and a decrease in the consumption of Red Bull.

C Only a decrease in the consumption of Red Bull.

D Only an increase in the consumption of Mars

What is an imperfect competition

Q.No.7 A juice company has the following cost

Q(VATS) VARIABLE COST TOTAL COST

0 $0 $30

1 10 40

2 25 55

3 45 75

4 70 100

5 100 130

6 135 165

a. Calculate average variable cost, average total cost, and marginal cost for each quantity.

b. Graph all three curves. What is the relationship between the marginal-cost curve and the average total-cost curve? Between the marginal-cost curve and the average-variable-cost curve? Explain.

Relation between Marginal Cost and Average Total Cost: When A.T.C declines, the M.C is less than the A.T.C but when Average Total Cost increases the Marginal Cost is greater than A.T.C. Relation between Marginal Cost and Average Variable Cost: Both Marginal Cost and Average Variable Cost are intersecting at the minimum point and at the intersection they both are equal.

How to assess future food security: on foresight, forecasting, projecting, predicting and exploring the future

Mary optimizes her satisfaction when she consumes 10 books (B) and 5 apples (A) each month. Mary's monthly income is $ 50 and she currently spends $ 10 on apples. Write Mary's budget line in slope intercept form with books measured on the vertical axis.

KPLC installs new electricity post in Kibera estate and finds that 15% of the new post need a return visit to check for possibilities of vandalism Five post were erected last week Assuming independence of outcomes of these vandalism What is the probability that a return visit was need for all the posts

Consider a firm with the following production function q = 10 l^1/2 k^1/2. It aims to produce 1000 units of output and faces prices for labour and capital as follows: w =20, v =5