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Microeconomics
GFU Insurance Company offers mail-order car insurance to preferred-risk drivers in the New York city. The company is the cheap provider of insurance in this market but doesn’t believe its annual premium of $2,500 can be raised for competitive reasons. Rates are expected to remain stable during coming periods; hence, P = MR = $2,500. Total and marginal cost relations for the company are as follows:
TC = $100,000 + $100Q + $0.006 Q2
MC = ∂TC/∂Q = $100 + $0.012Q
The profit maximizing activity level, and the profit at this activity level would be?
TC = $100,000 + $100Q + $0.006 Q2
MC = ∂TC/∂Q = $100 + $0.012Q
The profit maximizing activity level, and the profit at this activity level would be?
Microeconomics
THE FOLLOWING TABLE SHOWS TWO OBSERVATION ON FACTOR DEMAND X1, X2 AND FACTOR PRICES, W1, W2 AND OUTPUT, Y FOR A FIRM. IS THE BEHAVIOR DEPICTED IN THIS TABLE CONSISTENT WITH COST MINIMIZING BEHAVIOR?
Microeconomics
Let suppose income of the Martin is 50 dollar. Martin needs to buy two goods milk and biscuits. Price of milk is 10 per liter and price of biscuits is 5 per packet. Draw the budget line for Martin showing different combinations he can purchase with his income.
Microeconomics
2. Draw and give description of a situation where supernormal economic profits of firms attract entry in the industry. Simultaneously show the effect on the market Demand/Supply. 10 MARKS
COMPLETE LABELLING AND DESCRIPTION WILL GET FULL CREDIT.
COMPLETE LABELLING AND DESCRIPTION WILL GET FULL CREDIT.
Microeconomics
Explain the concepts of consumer surplus and producer surplus in the market for
air travel. [10 marks]
(b) Discuss the view that a free market at competitive market equilibrium leads to the most
efficient allocation of resources from society’s point of view.
air travel. [10 marks]
(b) Discuss the view that a free market at competitive market equilibrium leads to the most
efficient allocation of resources from society’s point of view.
Microeconomics
TRUE or FALSE statement
"Suppose the government imposes a £5 per month excise tax on cable TV. If the demand for cable TV is perfectly inelastic and the supply curve is elastic (but not perfectly elastic), then the price of cable TV will increase by exactly £5.”
"Suppose the government imposes a £5 per month excise tax on cable TV. If the demand for cable TV is perfectly inelastic and the supply curve is elastic (but not perfectly elastic), then the price of cable TV will increase by exactly £5.”
Microeconomics
If R(Q) = 1000Q - 2Q2
C(Q) = 20Q + 1000
What is the firm's fixed cost?
Firm's marginal revenue (MR), marginal cost (MC) and average cost (AC)
functions?
Using the second-order condition, establish whether the critical value corresponds to a
maximum or minimum.
C(Q) = 20Q + 1000
What is the firm's fixed cost?
Firm's marginal revenue (MR), marginal cost (MC) and average cost (AC)
functions?
Using the second-order condition, establish whether the critical value corresponds to a
maximum or minimum.
Microeconomics
1. A shoes manufacturing company finds from the sales data of the other manufactures of similar product that the demand functions for the shoes can be expressed as
Q=10,000-20 P
Find:-
a. Number of shoes sold when P=$300
b. Price for selling 5400 pair of shoes
c. Price of zero sales
d. Point elasticity of demand at price $500
Q=10,000-20 P
Find:-
a. Number of shoes sold when P=$300
b. Price for selling 5400 pair of shoes
c. Price of zero sales
d. Point elasticity of demand at price $500
Microeconomics
1. In a certain city, the movie is monopolistically competitive. In the long run, the demand for movies at given theater is given by the equation:-
P=5.00-0.002 Q where Q is the number of paid admission per month. The average cost function is given by: AC=6-0.004 Q +0.000001 Q2
Required
a. To maximize a profit, what price should the managers of the theatre charge
b. What will be the number of paid admission per month?
c. How much economic profit will the firm earn?
2. A central shop demand for last year was 200 units at the price of $ 8, whereas this years, the quantity demanded is 400 units at price $ 6.
Required
a. What will be the point elasticity of demand for the shop?
b. Interpret the result
P=5.00-0.002 Q where Q is the number of paid admission per month. The average cost function is given by: AC=6-0.004 Q +0.000001 Q2
Required
a. To maximize a profit, what price should the managers of the theatre charge
b. What will be the number of paid admission per month?
c. How much economic profit will the firm earn?
2. A central shop demand for last year was 200 units at the price of $ 8, whereas this years, the quantity demanded is 400 units at price $ 6.
Required
a. What will be the point elasticity of demand for the shop?
b. Interpret the result
Microeconomics
In the Solow growth model, a rise in the rate of depreciation will result in?
