Microeconomics Answers

Danny “Dimes” Donahue is a neighborhood’s 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $1.5 each, he sells 100. At a price of $1 each, he sells 300. Is demand elastic or inelastic over this price range? If demand had the same elasticity for a price decline from $1 to $0.5 as it does for the decline from $1.5 to $1, would cutting the price from $1 to $0.5 increase or decrease Danny’s total revenue?

You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or putting it in a bank account for 5 years that pays you 5% per annum. Calculate the opportunity cost of spending money now?

3 goods or products that we can identify as elastic and inelastic. Explain how you classify each as elastic good and inelastic good

A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500 units per day, its total cost would be $275. What are the firm’s ATC per unit at these three levels of production?

    At 1,000 units per day, ATC = $  .

    At 800 units per day, ATC = $  .

    At 500 units per day, ATC = $  .