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5. If firm’s objective is to maximize total revenue at which point of the demand
curve will it produce and why?
5. If firm’s objective is to maximize total revenue at which point of the demand
curve will it produce and why?
The demand curve for a good is Q = 60 – p and the supply curve is Q = p. The government imposes a specific tax of t = 2 per unit of output.
a) Find the market equilibrium output (Q) and price (p) before tax? (4)
b) Find the new market equilibrium output (Q) and price (p) after tax (5).
c) Explain the effect the tax has on consumer surplus and producer surplus. (6)
a) Explain the relationship between marginal cost, wage and marginal product of labour (9).
b) Derive the relationship between marginal cost, wage and marginal product of labour (16)
a) Use a diagram discuss and explain why marginal cost above its minimum average variable cost is called supply curve. (6)
b) Explain competitive firm short –run shutdown decision rule. (4)
a) Use a diagram discuss and explain why marginal cost above its minimum average variable cost is called supply curve. (6)
b) Explain competitive firm short –run shutdown decision rule. (4)
Suppose a consumer has income of $120 per period, and faces prices, price of X=2 and Price of Z =3. Her goal is to maximize her utility, described by the function U = 10X0.5Z0.5.
i. What is the consumer’s budget constraint? (3)
ii. State the formula for finding marginal utilities for goods X and Z (2)
iii. Calculate the marginal utilities for goods X and Z (4)
iv. State the utility maximizing condition for this consumer (4).
v. Calculate the utility maximizing bundle (X*, Z*) (13)
Explain why two indifference curves cannot intersect each other.
How the impact of inelastic and elastic demand curve will differ if environmental policies are enforced
The locus of the consumer equilibrium points, when income of the consumer changes and prices of the
good remain constant, is known as
