Microeconomics Answers

The labour supply curve is positively sloped regardless of whether leisure is a normal or inferior good. true or false, explain.

The competition commission of india had imposed a penalty of more than Rs 60 billion on cement firms in 2012.
Justify the same based on following point
a) how do you think the cartel would affect the price & quantity? Can prices diverge significantly from marginal cost in cement industry, and why?
b) How do you think the cartel formation helps producers?
c) how do you think the cartel impacts the consumers?
d) how does the cartel affect overall welfare of the society and why?

A decision by the provincial governments to include counseling by psychologists within the public insurance plan would decrease the demand for physician services.”

Do you agree or disagree with this statement, and why?

b) A news website reported (Feb. 17, 2020) that ridership of Karachi Metro Bus declined after a fare increase: “There were nearly four million fewer riders in December 2019, the first full month after the price of a token increased Rs. 25 to Rs.150, than in the previous December, a 4.3 percent decline.”
i. Use these data to estimate the price elasticity of demand for Karachi Metro Bus. (2 Marks)
ii. According to your estimate, what happens to the Karachi Metro Bus’s revenue when the fare rises? (0.5 Marks)
iii. Why might your estimate of the elasticity be unreliable? (0.5 Marks

Columns 1 through 4 in the table at the top of the page show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106.
a)What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility?

A news website reported (Feb. 17, 2020) that ridership of Karachi Metro Bus declined after a fare increase: “There were nearly four million fewer riders in December 2019, the first full month after the price of a token increased Rs. 25 to Rs.150, than in the previous December, a 4.3 percent decline.” i. Use these data to estimate the price elasticity of demand for Karachi Metro Bus. (2 Marks) ii. According to your estimate, what happens to the Karachi Metro Bus’s revenue when the fare rises? (0.5 Marks) iii. Why might your estimate of the elasticity be unreliable?

Price (Rupees per Ice-cream cup) Quantity demanded (Ice-cream cup per month) Quantity Supplied (Ice-cream cup per month)
140 500 1500
120 750 1200
100 1000 1000
80 1250 750
60 1500 600
40 1750 300

a) Plot the demand and supply curves and show the equilibrium price and quantity. Also, briefly explain if law of demand and supply holds true in this case. (2 Marks)
b) Is there surplus or shortage in the market at price Rs.40? At price Rs.120? (2 Marks)
c) Suppose if the price of frozen yogurt decreases, elucidate the change it might cause on the ice-cream market given the consumption behavior and also illustrates the same through using 2-dimensional space. In your opinion what type of elasticity best describes this situation? (3 marks)
d) Suppose the price of milk decreases from the equilibrium price. Explain what will happen to the supply curve and also indicate the same on the graph.

What are the factors you consider to figure out the opportunity cost of a vacation to Gorakh
Hill Station? (1 Marks) (Word count: 100 words max.)
b) Efficiency and equality are examples of classic trade-offs in economics. Analyze each of the
following statementsfrom the standpointsof efficiency and equality.
i. “Amid COVID-19, everyone in society should be guaranteed the best healthcare
possible.” (2 Marks) (Word count: 150 words max.)
ii. “When workers lose their jobs, they should be able to collect Ehsas income support
benefits until they find a new job.”

Explain the family interaction in themarket of factor of priduction and family interaction in the market goods snd services