Microeconomics Answers

What is your explanation of the prevailing cost conditions of the chosen firm ( restaurant)?

The mesa Redbirds football team plays in a stadium with seating capacity of 80,000. However, during the past season, attendance averaged only 50,000. The average ticket price was $30. If the price elasticity is -4, what would the team have to charge in order to fill the stadium?If the price were to be decreased to $27 and the average attendance increased to 60,000, what is the price elasticity?

How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves?

How a rise in the rate of interest might cause a shift in an economy’s aggregate demand curve? (8 marks)

using the interpretations of income elasticity theory, what types of goods are these:
1.71
.53
.99
.01

s] Kal is considering going to a new Superhe
ro movie. The price of the movie
ticket is $12, and the movie is 120 minutes long. K
al’s “demand” for watching minutes of
the movie (in dollar value) is:
p=0.4-(1/240)m
where m is the number of minutes of the movie he wa
tches.
If Kal leaves up to and including 30 minutes into t
he movie, the cinema will return his
entire $12. If Kal leaves between 30 and up to 60 m
inutes, the cinema will only return
$6 of his ticket. However, if Kal stays longer than
60 minutes, he cannot get back any of
his ticket price.
(a)
[3 marks] Draw Kal’s demand curve. What is the high
est price that he
would have
paid for the movie (assuming that he would stay til
l the end)?
(b)
[5 marks] For how long will Kal stay in the cinema?
Explain your answer

s] Monopco faces the market demand curve fo
r widgets. This market demand
is Q=20-p (which we could rearrange to get p=20-Q).
This means that if p=20, then Q=0;
if p=19, Q=1; if p=18, Q=2, etc. The marginal cost
of production (MC) is always $4.The
average total cost of production (ATC) is also alwa
ys $4.
(a)
[6 marks] Set up a table showing price, quantity, t
otal cost and total revenue (TR) for
price descending from 20 to 0. Use this to calculat
e marginal revenue (MR). Note,
for MR you need to go ‘between’ each of the q-level
s .
(b)
[6 marks] Draw a diagram showing Monopco’s situatio
n, including its demand, MR,
MC and ATC curves.
(c)
[6 marks] Show how many widgets Monopco will produc
e, and the price it will
charge for each widget. Calculate the firm’s profit
s and the DWL it creates. Show
these areas on your diagram.
(d)
[4 marks] Recalculate the DWL that would occur if i
instead MC=ATC=0 for all widgets.
Is this DWL higher or lower than in pa

What is Ricardian Theory of Trade and Theory of comparative cost ? Are they the same?

can electric utility companies always raise their total revenue by raising their rates? Explain your answer.

What kind of elasticity is relevant when you are trying to figure out how a price cut by the burger shop next door will affect the demand for your pizza? Explain your answer

Suppose a perfectly competitive firms demand cube is below its average total costs curve.explain the conditions under which a firm continues to produce in the short run.

2.) suppose the industry equilibrium price of residential housing is $100 per square foot and a minimum average variable cost for a residential construction contract is $110 per square foot. What would you advice the owner of the firm to do, explain your answer