Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

problem1)

The price elasticity (ε) of demand for Q has been estimated at -0.5. Current consumption Q* is 70 units and market price (P*) is 0.70.
a) Fit the linear demand curve to a observed market data. Illustrate your result using a suitably labelled diagram.  Hint: εB(P*/Q*)  a and the equation for a linear demand function is Q*= a - bP*
b) Now assume that price of Q increases to P* = 0.80. Using your estimated demand function, find out the change in consumer surplus arising from the price increase. Illustrate your result.                                                                        

problem 2)

Zac consumes only pizza and chianti. He consumes these goods in fixed proportions: 2 slices of the pizza for one glass of chianti. His income is $100 per week.
a) Derive demand functions for the pizza and chianti. Are the goods normal or inferior, substitutes or complements?
b) If pizza costs $1 per slice and chianti $3 per glass, how much of each good will he consume?
c)If price of pizza falls to $0.5 per slice and, chianti stays at $3 per glass, how much of each good will Zac consume?                                                                       
d) Using suitably labelled diagram with pizza on a horizontal axis, illustrate the impact of a change in price of pizza from $1 to $0.5 per slice. Show the level of utility before and after the price change and show the decomposition line.  

problem 3)

A consumer purchases food (X) and clothing (Y). Her utility function is given by:U(X,Y) = XY +10X , income is $100 and the price of food is $1 and the price of clothing is Py.
a) Derive an equation for consumer’s demand function for clothing.
b) Are X and Y normal goods?

problem 4)

Firm’s production function is given by Q= 20√LK. The price of labour is w and the price of capital is r.
a) The price of labour is $5 and the price of capital is $20. What is the cost minimising combination of labour and capital if the firm wants to produce 1000 units per year?
b) Derive total cost function, as the function of Q, w and r.Substitute the values w = $5 and r = $20 into the cost function and illustrate LRTC(Q), LRAC(Q) and LRMC(Q) using a suitably labelled diagram (LR = long run). Why is the LRTC function shaped the way it is?
c) Now assume that capital is fixed at K‾ , derive the short run total cost function, using w = $5 and r = $20.Illustrate the SRTC(Q), SRAC(Q) and the SRMC(Q) functions using a suitably labelled diagram (SR = short run).

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9524

Have any Question? 


Related Questions in Microeconomics

Question tom jones beef jerky is naturally high in protein

Question: Tom Jones Beef Jerky is naturally high in protein and low in fat, calories, and carbs that make it an ideal snack for active, health conscious individuals. The only problem is that consumer research shows that ...

Question submit a brief reflective essay minimum of 750

Question: Submit a brief, reflective essay (minimum of 750 words) with the following three sections: 1. Write your personal thoughts about the main concepts of the Cheung-Judge (2012) article, and identify personal trait ...

Question is the us banking system designed to failif not

Question: Is the U.S. banking system designed to fail? If not, why has it been a source of so much instability over the centuries? Why have governments all over the world needed to provide ever-increasing quantities of i ...

Question by 1993 nations in the european union eu had

Question: By 1993, nations in the European Union (EU) had eliminated all barriers to the flow of goods, services, labor, and capital across their borders. Even such things as consumer protection laws and the types of plu ...

Question 1- how did the political reaction to government

Question: 1- How did the political reaction to government funding for the Solana project differ from the reaction to more conventional government spending projects such as roads and schools? What does the case tell us ab ...

Question in an effort to reduce energy costs a major

Question: In an effort to reduce energy costs, a major university has installed more efficient lights as well as automatic sensors that turn the lights off when no movement is present in a room. Historically, the cost of ...

Question your company is intending to launch a new product

Question: Your company is intending to launch a new product, and your line manager is worried that the product will not "cross the chasm" and he has asked you to prepare a presentation regarding the product adoption life ...

Question the discussion answers must be a minimum of 125

Question: The discussion answer(s) must be a minimum of 125 words of substance with any references cited in APA format. No copying and pasting of work previously done for someone else. Identify a firm which operates in m ...

Question 1 a due to a technological boom and rapid

Question: 1 (a) Due to a technological boom and rapid expansion of the economy, the Federal Reserve Bank is pursuing a contractionary monetary policy. Using a graphical analysis, show the effects of this policy on the eq ...

Question the american cancer society acs is a nationwide

Question: The American Cancer Society (ACS) is a nationwide, community-based, voluntary health organization dedicated to eliminating cancer as a major health problem. Together with its supporters, ACS is committed to hel ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As