Microeconomics Answers

the sales manager of a retail outlet suggests that the best way to increase customers is to have a sale. if a 10 percent price cut doesn’t bring in enough customers then he’ll cut price 20 percent. increased cash flow should take care of profits. do you agree? explain

If you were the Prime Minister of Pakistan, would you be more interested in your economic
advisors’ positive views or normative views?

The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expression
TC 1000+2Q+0.01Q2
a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answer
b) At profit maximizing level what is firm total cost, total revenue and marginal cost
c) Why does a competitive firm is considered as a price taker and Monopoly firm as a price maker

If an indifference curve were horizontal(assuming x is measured on the horizontal axis and y along the vertical axis), thiswould mean that the consumer is saturated with
a)good X only b)good Y only c)both good X and Y d)neither good X and Y

Sometimes both demand and supply shift at the same time. Create a graphic organizer that shows all possible double shifts. Be sure to identify what happens to price and quantity in each scenario.

Describe some of the trade-offs faced by each of
the following:
a. a family deciding whether to buy a new car
b. a member of Congress deciding how much to
spend on national parks
c. a company president deciding whether to
open a new factory
d. a professor deciding how much to prepare
for class
e. a recent college graduate deciding whether to
go to graduate school
2. You are trying to decide whether to take a vaca

Find out what other food prices have risen or fallen a lot in recent months and explain why.

How do real food prices (i.e. prices after correcting for inflation) compare today with 10 and 20 years ago? Explain why.

There is a supply and demand graph, linear. Equilbirum quantity= 30. Equilibrium price= 10. Quantity is 50 and price is 20. The point on the vertical axis which intercepts witht he supply curve = 5.

At equilbrium, the price elasticity of supply is given by?

The production function at Ginko’s Copy Shop is
q = 1,000 * min(L, 3K), where q is the number
of copies per hour, L is the number of workers, and
K is the number of copy machines. As an example,
if L = 4 and K = 1, then min(L, 3K) = 3, and
q = 3,000.
a. Draw the isoquants for this production function.
b. Draw the total product, average product, and
marginal product of labor curves for this production function for some fixed level of capital.