Microeconomics Answers

Consider the market for minivans. For each of the events listed here, identify
which of the determinants of demand or supply are affected. Also indicate whether
demand or supply increases or decreases. Then draw a diagram to show the effect
on the price and quantity of minivans.
a. People decide to have more children.
b. A strike by steelworkers raises steel prices.
c. Engineers develop new automated machinery for the production of minivans.
d. The price of sports utility vehicles rises.
e. A stock market crash lowers people’s wealth.

Demand and supply in a market are described by the equations
Qd = 66-3P
Qs = -4+2P
(i) Solve algebraically to find equilibrium P and Q

Nowadays, It is observed that people are more health conscious taking more regular health supplements. Moreover, more drug companies are involving in the production of health supplements.
a) How would the demand of health supplements be affected? Explain the consequences of the impact on the equilibrium price and equilibrium quantity?
b) How would the supply of health supplements be affected? Explain the consequences of the impact on the equilibrium price and equilibrium quantity?
c) Consider (a) and (b) together, it is observed that eventually the equilibrium price decreases, explain your simple analysis and show your illustrations with a demand and supply diagram.

My answer:c) When both the demand and supply shifts to the right, the equilibrium price decreases and the equilibrium quantity increases.
Is this correct? How can I improve the answer?

Now consider an economy consists of four workers: Harry, Larry, Moe, and Curly, where Harry and
Larry are brothers. Each works 10 hours a day and can produce two services: mowing lawns and washing
cars. In an hour, both Harry and Larry can either mow one lawn or wash one car; Moe can either mow
one lawn or wash two cars; and Curly can either mow two lawns or wash one car.
a. Calculate how much of each service is produced under the following circumstances, which we label
A, B, C, and D:
• All four spend all their time mowing lawns. (A)
• All four spend all their time washing cars. (B)
• All four spend half their time on each activity. (C)
• Larry and Harry spends half their time on each activity, while Moe only washes cars and Curly only
mows lawns. (D)
b. In the production possibilities frontier for this economy. how many kink points would be on your
graph?

In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer. In the case of strawberries, however, the reverse is true: The price of strawberries is lower in the peak season than it is in the winter season.

Provide THREE reasons to explain this seeming contradiction.

Ensure that you define any key terms used in your discussion.

In the case of strawberries, however, the reverse is true: The price of strawberries is lower in the peak season than it is in the winter season. In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer

Given that P=25-50Q
TC=100-15Q+60Q2
Where p=price,Q-quantity and TC-Total cost Get the level of output that minimises cosy

QD1 = 45 - 2P1 + 2P2 - 2P3
QS1 = -5 + 2P1

Find the equilibrium price and quantity

In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer. In the case of strawberries, however, the reverse is true: The price of strawberries is lower in the peak season than it is in the winter season.

Provide THREE reasons to explain this seeming contradiction.

In the winter, which is the peak season for winter coats, the price of winter coats is typically higher than it is in the summer. In the case of strawberries, however, the reverse is true: The price of strawberries is lower in the peak season than it is in the winter season.

Provide THREE reasons to explain this seeming contradiction.