Microeconomics Answers

Multichoice Ghana offers two basic packages: Sports and Movies. There are three

different types of users: parents, sports fans and generalists. The table below shows

the maximum price each type of consumer is willing to pay for each package.

Consumer type Sports (GHC) Movies (GHC)

Parents 10 40

Sports fans 50 10

Generalists 40 40

a) What price should Multichoice Ghana charge for each package and what will be

its total revenue if it cannot bundle the two packages?

b) If Multichoice wants to bundle the two packages, what price should it charge?

What will be its total revenue?

c) If Multichoice decides to sell each package for GHC 50 and a combined bundle

for GHC 70. How does the revenue from this method compare with those in parts

(a) and (b)?

1)  A firm’s production function is given by the equation, Q = 25 K^0.5L ^0.5 where ‘Q’ represents units of output, ‘K’ units of capital and ‘L’ units of labor.

a)              Does this production function exhibit increasing, decreasing or constant returns to scale?

b)              Determine MRTSLK

c)              Calculate APL and APK when firm utilizes 25 units of capital and 100 units of labor.

d)              The firm utilizes 40 units of labor and 80 units of capital, if the price of labor is $ 50.00, price of capital $ 100.00 and total capital $ 10,000.00.

Is this factor combination optimum? Give reason. 

1. Explain the difference between decrease in demand and decrease in quantity demanded, and using any product of your choice, briefly explain three factors that can cause decreases in demand for that product. 

2. Explain the difference between a price ceiling and price floor. Use two popular examples with well-labelled diagrams to explain.

3. Assuming that the market for Frytol cooking oil is currently in equilibrium (Demand equal supply). Briefly explain with aid of well-labeled diagrams how the following events will affect the equilibrium price and quantity of Frytol (in each case, start from a new equilibrium). 

a) Average incomes fall due to COVID-19. 

b) It is discovered that Frytol oil is good for adults.

c) A tax of 1.75% is place on Frytol. 

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 equilibriam price and equilibriam quantity will be affected by these change. Make use of a combination of diagrams and verbal explanation to explain your answer.

consider the demand curve AD of a good in figure. the distance AB,BC, and CD are equal to x ,y, and z units respectively. in term of x, y, and z, what will be the price elasticity of demand for the good at point A, B, C and D

For each of the following pair of goods, which good would you expect to have more

price elastic demand and why?

a. Textbooks recommended by lecturers or mystery novels.

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

c. Heating oil during the next six months or heating oil during the next five

years.

d. Lemonade and water.

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 the equilibrium quantity will be affected by these changes. Make use of a combination of diagrams and verbal explanation to explain your answer.

A firm can manufacture a product according to the production function (LOI, LO2,

LOS, L06)

Q = F(K, L) = K 3/4 L 1/4

a. Calculate the average product of labor, APL, when the level of capital is fixed at 81

units and the firm uses 16 units of labor. How does the average product of labor

change when the firm uses 256 units of labor?

b. Find an expression for the marginal product of labor, MP L, when the amount of capi-

tal is fixed at 81 units. Then, illustrate that the marginal product of labor depends on

the amount of labor hired by calculating the marginal product of labor for 16 and 81

units of labor.

c. Suppose capital is fixed at 81 units. If the firm can sell its output at a price of $200

per unit of output and can hire labor at $50 per unit of labor, how many units of labor should the firm hire in order to maximize profits?

Explain different types of price elasticity of demand for health care.

what is demand and what are types of demand