Microeconomics Answers

Select and name a market of any well-known product (left upon your imagination), draw its market diagram, state and name four different factors that might cause changes, showing the changes in equilibrium price and quantity.

With reference to the PPC, assume Malaysia is producing 2 types of goods - manufactured goods and agricultural goods. It wants to increase both the output by 20% in 5 years. What steps should the government take to achieve this goal?

Suppose the demand and supply curves for a product is given by

Q=500-2P

Q= -100 +3P

a. Which is the supply curve and why?

b. Graph the demand and supply curves.

c. Compute the equilibrium price and quantity.

d. If the current price is 100, what is the quantity demanded and quantity supplied? How would you describe this situation and what would you expect to happen in this market?

e. Suppose that the demand changes to Q=600-2P. Find the new equilibrium price and quantity and show this on your graph.

For each of the following pairs of good, which good will you expect to have more price elastic demand and why?

1. Textbooks recommended by lecturers or mystery novels.

2. Downloads of tracks by Jay - Z or downloads of hip-hop music in general.

3. Heating oil during the next six months or heating oil during the next five years.

4. Lemonade or water.

You have the following information for your products:

1.The price elasticity of demand is -0.9

2. The income elasticity of demand is 0.5

3. The cross - price elasticity of demand between your good and a related good is 2.0

What can you determine about consumer demand for your product from this information?

The population in country c decreases due to lower birth rate. At the same time there is an increase in the cost of fertilizers, which is used to grow. vegetables. Explain how the market for this vegetables will be affected by this changes. Indicate how equilibrium price and equilibrium quantity will be affected by this changes

The total cost of producing Q units of a given product is given by TC = 500+ 4Q2-12Q. Compute Marginal cost and average cost

There is a conflict between the manager and one of the employees in the procurement department of the company. They are in disagreement on whether the company should make charitable. According to the manager the company should not give money to charity because it does not generate any income

Draw income offer curve and their corresponding Engel curve for the following commodities.

i) Commodity 1 is a perfect substitute for commodity 2 and price of commodity 2 is less than commodity 1.

ii) Commodity 1 is inferior and 2 is normal

The population in country C decreases, due to a lower birth rate. At the same time, there is an increase in the cost of fertilizer, which is used to grow vegetables. Explain how the market for vegetables will be affected by these changes. Clearly indicate how the equilibrium price and equilibrium quantity will be affected by these changes. Make use of a combination of diagrams and verbal explanation to explain your answer. Note that your diagrams should be properly annotated and that marks will be deducted for any missing labels on your diagram.