Microeconomics Answers

Consider your decision whether to go skiing for the weekend. Suppose you spend $300 on tickets etc and $75 on food. You also work a job where u get paid $120 and will have to miss one day kid said job. What is the opportunity cost of going skiing?

How to derive individual and market supply functions from cost function

Explain the shut down point in diagram?

With the aid of a diagram, show the effect of the following changes on the equilibrium price, quantity and equilibrium point.
a) Market for tomatoes: Massive flood has destroyed 50% of the tomatoes on the tomato field.
b) Market for coca cola: Price of coca cola has gone up.
c) Market for bread: Consumer’s income has increased and cost of production has increased.
d) Market for housing: increase in the number of marriages and increase in the price of construction materials.
e) Market for beer: Government imposes a sales tax on beer.
f) Market for maize: Increase in the number of maize farmers and increase in consumer taste for maize.
g) Market for Samsung phone: People switch to Huawei.
h) Market for Education: Increase in the price of school fees.
i) Money Market: Increase in the lending rate.
j) Market for DIAPERS: Increase in the number of pregnant women.

If the price for housing falls and the demand for housing is inelastic, then:
a) the percentage rise in quantity demanded is greater than the percentage fall in price and total revenue rises.

b)the percentage rise in quantity demanded is equal to the percentage fall in price and total revenue remains constant

c)the percentage rise in quantity demanded is greater than the percentage fall in price and total revenue falls

d)the percentage rise in quantity demanded is less than the percentage fall in price and total revenue falls.

What does elasticity measure?

An individual makes purchases once a week. If he buy in large hypermarkets, usually located far from the center, it turns out to be 20% cheaper than in the nearest store. However, there are additional costs for transport of 10$ and it takes 4 hours longer. An individual is moderately lazy, and saving less than 15$ will not force him to spend 4 hours of free time.
1) at what amount of expenses does an individual prefer the nearest store?
2) when the amount of expenses is more than 130$ per week, the individual still prefers to buy at the nearest store. What time does he now estimate his free time (per hour)?

The respective elasticities of demand and supply for a product are -0.55 and 1. Further, it is observed that the price of this commodity is $80 whilst the prevailing quantity in the market is 950. By adopting a demand and supply concept of

Qd = a + bP
Qs = c + dP use the information provided to estimate the values of a,b,c and d.

Q) Mr. Haroon has limited income which he spends on goods X and Y, market price of X is Rs. 30 per unit and Y is Rs. 40 per unit. When he draws his budget line, its X intercept at 100 units. Find Haroon’s income and slope of his budget line.