Microeconomics Answers

if the average income rises from 18000 per year to 22000 per year annual gasoline consumption per household rise from 1000 to 1500 gallons the income elasticity of demand for gas is

When price of tea in local cafe rises from 10 to 15 dollar per cup demand for coffee rises from 300 cups to 500 cups a day despite no change in coffee price then determine cross price elasticity and based on the result what kind of relation exist between two goods ?

A maximizing consumer with preferences u = min (1x, 2y) and an income of 120 dollars pays pX= 2 for good x. The price of good y changes from pY= 2 to pY= 4 dollars. After the price change x1 =

You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Use the above information to answer the questions that follow:
Q.4.4 Is the equilibrium level of income also the full employment level of income? Explain your answer

3. The demand for cookies is given by P = 36.2 – 0.2QD where QD is the quantity demanded of the cookies (number of cookies per day) and P is the price of cookies ($/cookie). Also, the supply of cookies is given by P = 1.4 + 0.3QS where QS is the quantity supplied of the cookies (number of cookies per day) and P is the price of cookies ($/cookie).

Find the equilibrium price and quantity. Show your work.

Given that QD= 30 – 5P and QS = 2P -5; also if sales tax of N2 is imposed per unit
i.Calculate the share of tax for both seller and buyer.
What does your answer in (i) suggest in term of elasticity.

Q3. Suppose that Toyota and GM are considering entering a new market for electric automobiles and that their profits (in millions of dollars) from entering or staying out of the market are described. If both enter Toyota gets profit of 10 million dollars while GM bears loss of 40 million dollars. If both do not enter both get no profit. If Toyota enters it gets a profit of 250 million dollars while GM does not enter and earn no profit. If GM enters it gets a profit of 200 million dollars
while Toyota does not enter and earn no profit. (4)
a. If the firms make their decisions simultaneously, do either or both firms enter? Is there any dominant strategy?
b. How would your answer change if the U.S. government committed to paying GM a lump-sum subsidy of $50 million on the condition that it would produce this new type of car?

A market primarily in what type of economic system?