Microeconomics Answers

During 2013, the demand for LCD TVs appeared to be falling. At the same time, some industry observers expected that several smaller TV manufacturers might exit the market. Use a demand and supply diagram to analyze the effects of these factors on the equilibrium price and quantity of LCD TVs. Clearly show on your diagram the old equilibrium price and quantity and the new equilibrium price and quantity. Can you tell for certain whether the new equilibrium price will be higher or lower than the old equilibrium price? Briefly explain.

The price elasticity of demand for petrol used by car drivers in an economy is estimated to be -0.2
Which of the following is the likely reason for the low PED?
- a tax on petrol
- cycle lanes on many roads
- few bus and rail services
- low household incomes

draw a production possibility frontier that shows the trade off between the production of cotton and soybeans.

Explain with the aid of a properly labelled diagram, the marginal revenue curve facing a perfectly competitive firm.

Define the law of supply

Define Gross Domestic Product (GDP) and discuss the problems associated with GDP as a measure of an economy`s total production.

using the profit function; π=P²/√wr, show that the profit function is positively and linearly homogeneous in both and output prices

Until recently, Marco's Pizza sold a large pizza for $20 and they sell 250 large pizzas per week. They just raised the price to $28 and as a result, they only sell 150 pizzas per week. Using the midpoint rule, find the price elasticity of demand for Marco's Pizza's large pizzas. Is the demand for Marco's elastic or inelastic? Did their total revenue increase or decrease with the change in price?

Unit costs that decrease when total volume of production increase are:
a) avoidable costs
b) indirect costs
c) sunk costs
d) fixed costs
e) none of the above

American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. construct a table