Microeconomics
Instructions:
The assignment is worth 40% of the total unit weight.
1. Students are required to cover all stated requirements.
2. Your answer must be both uploaded to Moodle in word file and handed over a printed copy.
3. You need to support your answers with appropriate Harvard style references where necessary.
4. Include a title/cover page containing the subject title and code and the name, student id numbers.
5. Please save the document as ECO101AT1_first name_Surename_Student Number
Please answer the following THREE questions (Word Limit: 2000 words)
1. What would the consumers' and producers' tax incidences be equal to if the government imposed an excise tax when:
(a) demand was perfectly elastic
(b) demand was perfectly inelastic
(c) supply was perfectly elastic
(d) supply was perfectly inelastic?
Draw graphs to support your arguments.
You are requested to submit your assignment on Turnitin for checking Plagiarism
2. Indicate how each of the following-(a) to (e) on the next page-would shift the (i) marginalcost curve, (ii) average-variable cost curve, (iii) average-fixed-cost curve, and (iv) averagetotal-cost curve of a manufacturing firm. In each case specify the direction of the shift.
(a) A reduction in business property taxes
(b) An increase in the nominal wages of production workers
(c) A decrease in the price of electricity
(d) An increase in insurance rates on plant and equipment (e) An increase in transportation costs.
3. Suppose the productivity of labour and capital are as shown in the table at the top of the next page. The output of these resources sells in a purely competitive market for $1 per unit. Both labour and capital are hired under purely competitive conditions at $1 and $3 respectively.
(a) What is the least-cost combination of labour and capital to employ in producing 80 units of output? Explain.
(b) What is the profit-maximising combination of labour and capital for the firm to employ? Explain. What is the resulting level of output?
(c) When the firm employs the profit-maximising combination of labour and capital as determined in (b), is this combination also the least costly way of producing the profitmaximising output? Explain.