Microeconomics Answers

“Alcohol, tobacco, and gasoline have inelastic demand, so the buyers of these items pay most of the tax on them.” Show and explain this statement with the help of hypothetical demand and supply graph.

Make up an example of a monthly demand schedule for pizza and graph the implied demand curve. Give an example of something that will shift the demand curve and briefly explain your reasoning. Would a change in the price of pizza shift the demand curve

Why is concrete sold in local markets, while cement powder is sold in a national market

why would a consumer of 2goods be in equilibrium position if the marginal rate of substitution is equal to ratio of prices of the two goods

A firm has a total cost function equal to:


TC(q)=20+4q+0.1q^2



And faces a demand curve given by


P(q)= 15-0.3Q


What is the profit maximising production quantity, q, for this firm?

A firm's production function is given by Q= L2e^-0,01L

Find the value of L that maximizes the average product of labour

David runs his own business. He received an offer from a company for $50,000 per year. If he sells his business, he can get an amount of $100,000. Assume the annual interest rate is 5%. David is confused to run his own business or join the company. David annual revenue from his business is enough to cover all explicit costs and has $60,000 left over. There are no additional implicit costs. Calculate David’s accounting and economic profit.

You have been given the following information about the housing market for two-bedroom rental units in Vancouver:


c. Suppose that a price ceiling of $1,200 rent per month is imposed in the Vancouver housing market, what will be the effect of this on housing market in Vancouver?
Answer:

d. Suppose that a price floor of $1,100 rent per month is imposed in the Vancouver housing market, what will be the effect of this on housing market in Vancouver?
Answer:

e. Suppose that the government imposed a tax of $1000on homeowners, who will pay this tax? show and explain in graph (in part a, above)
Answer:

f. Suppose that the government imposed a tax of $1000 on homeowners, show and explain the effect on consumer surplus, producer surplus, Dead Weight Loss, government revenue and market efficiency.

A Business Firms sells a good at the price of Rs 450. The firm has decided to reduce the price of good to Rs 350. Consequently , the quantity demanded for the good rose from 25,000 units to 35,000 units . Calculate the price elasticity of demand

Suppose u(x1, x2) = x1x2. Are x1 and x2 gross complements or substitutes? Are they net
complements or substitutes?