Microeconomics Answers

To what extent can higher levels of government spending increase living standards? Refer to a developing country of your choice. (25 marks)

Discuss how the Hicksian definition of money addressed all the difficulties experienced under the
barter economic system

Please refer to the background information below to answer question 18 to 24. Utopia doctors immunize children against measles, a highly contagious and potentially deadly virus. The demand and supply curves for the immunization are given by the following equations. Demand: 200-P thousand immunizations per year Supply: Q = 8P - 45 thousand immunizations per year but the social marginal benefit (SMB) is given by the following equation Q=200 – 0.1 x SMB thousand immunizations per year and the private marginal cost and social marginal cost are identical. 18. If the market is left unregulated, the market equilibrium level of immunization is Answer18 ] thousand immunizations per year. 19. The total economic surplus to the society from the market equilibrium level of immunization is

1. The number of cinema Ticket in Karachi and the the ticket fares are regulated. The fare currently charged is Rs.500 a ticket. The Cinema Association want to obtain governmnet's permission to raise the fare to increase their reveniues and ask you to be their economic adviser. After Studying the market, you come up with the following demand schedule for cinema Tickets:
Price ( Rupees Per ticket) Quantity Demanded (ticket Per month)
300 160
400 120
500 80
600 40
700 0

(b) What happens to the cinema's total revenue if the fare rises from 500 to 600? Should the ticket sellers try to obtain permission to raise the fare.

Suppose two point sources are discharging phosphorus into Wisconsin’s Fox River and face the following abatement costs for this pollutant:
Point Source 1: TAC1 = 500 + 0.35(A1)2
MAC1 = 0.7A1

Point Source 2: TAC2 = 750 + 1.05(A2)2
MAC2 = 2.1A2,

where A1 and A2 represent the abatement of phosphorus effluents in pounds by Source 1 and Source 2, respectively, and TAC and MAC are measured in hundreds of dollars.
Assume that the state environmental authority has set the total maximum daily load (TMDL) for the Fox River. To achieve this limit, 40 pounds of phosphorus must be abated across the two point sources. Use this information to answer the following questions.

a. If a uniform abatement standard is used by the regulatory authority, what would be the dollar values of TAC and MAC for each source?

b. Based on your answer to part (a), is there an economic incentive for the sources to participate in the trading program? Explain briefly.

If the price of rice per Kg increases from Rs 200 to Rs 300, the quantity demand reduced from 10 Kg units to 8 Kg. Keeping the answer in view if price change by 7%, what happen to Quantity demand of the commodity

1. Given the TC function
TC = 10000 + 100q – 10q2 +(1/3)q3
Find
a) The MC function
b) Slope of the MC function
c) Output at which MC is equal to AVC.

The demand for product X depends on the price of product X as well as the average household income (Y) according to the following relationship

Qdx = 550 - 10 P + 0.001Y

The supply of product X is positively related to own price of product X and negatively dependent upon W, the price of some input. This relationship is expressed as:

Qsx = 90 + 50 P - 6 W
Given that Y = 40,000 and W = 2, what is the:

1. Equilibrium price?
2. Equilibrium quantity?