Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

problem: Please define or describe the following terms. A complete answer will include a graph, equation, and/or ex as part of each definition.

1) Consumer surplus
2) Giffen good
3) Income elasticity of demand

problem: Yao's weekly demand for basketballs is given by Qd = 3P2 where P is the price of basketballs. At the current price, Yao's demand for basket balls is unit elastic. What is the current price of a basketball, and how many basketballs is Yao buying at this price?

problem: Each day Akiko, who is in third grade, eats lunch at school.

She likes only Twinkies (t) and soda (s), and these provide her with utility of

U(t; s) = t3 . s - 3
Twinkies cost $0.15 each and soda costs $0.30 per cup at the school cafeteria. Akiko's parents give her $1.20 each day for lunch.

1) Find the marginal utility of Twinkies (MUt) and marginal utility of soda (MUs) if Akiko buys t Twinkies and s sodas.

2) What two equations must hold at the bundle (t; s) that maximizes Akiko's utility? Solve for her optimal combination of Twinkies and sodas.

3) The school is considering several possible policies to curb Twinkie consumption. Among the policies being considered are (a) limiting students to one Twinkie per day; and (b) raising the price of Twinkies to $0.45 each. The PTA (Parent-Teacher Association) has hired you to guide its decision. Discuss the expected effects of these two policies, using graphs and/or equations, as appropriate. (You may assume that all students have preferences identical to Akiko's.) Which policy will you recommend?

problem: Jacques gets utility from atoms and molecules. Last week, Jacques had a weekly income of $150, and the price of atoms was $12. Jacques consumed seven atoms and eleven molecules. This week, the price of a molecule is $10; Jacques's income and the price of atoms are unchanged. Suppose Jacques consumes six molecules this week.

1) Indicate both budget constraints and both bundles on a well-labeled graph, with atoms on the x-axis.

2) Is Jacques better off or worse off this week relative to last week? describe.

3) Are atoms and molecules complements or substitutes for Jacques? describe.

4) Next week, prices are expected to be the same as this week, but Jacques's income is expected to increase to $200. Add this future budget constraint to your graph. Relative to last week, will Jacques be better off next week, worse off, or can't you tell? describe.

problem: After observing Olga's consumption choices for two days in a row, Pavel, an economics student, tells here: You must not be rational. Yesterday, when bananas were on sale for $1 and peaches were $5, you bought five bananas and one peach. Today, bananas are back to $2 and peaches are still $5, and you're still buying five bananas!"

1) Show graphically Olga's budget constraint and chosen bundle from yesterday.

2) Are there any explanations other than irrationality that are consistent with Olga's behavior? Use words, diagrams, and equations in your answer.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9137

Have any Question? 


Related Questions in Microeconomics

Question 1 have you personally experienced globalization

Question: 1) Have you personally experienced globalization? How? 2) Write a two argument bullet points in favor or against globalization citing minimum one source. The response must be typed, single spaced, must be in ti ...

Question advertising can inform buyers but sellers must

Question: Advertising can inform buyers, but sellers must incur costs to advertise. If so, advertising can result in higher prices to consumers. Does this mean advertising is economically inefficient? If not, explain how ...

Question joe is graduating from college and is currently

Question: Joe is graduating from college and is currently faced with a decision of choosing between two competing job offers for the same position from equally reputable companies. The jobs are in two different cities A ...

Question the us economy did not have any increase in the

Question: The US economy did not have any increase in the core rate of inflation in 1999-2000 with the economy at full employment; instead, it had a stock market bubble. Many people subsequently held Alan Greenspan and t ...

Question identify a solution that the business community

Question: Identify a solution that the business community appears to favor for the current annual budget deficit in the US. For example, in the area of health care, the business community may prefer a policy that permits ...

Question describe the main goals of the federal reserve

Question: Describe the main goals of the Federal Reserve. What happens when these goals come into conflict? Explain how the Fed would decide if lower inflation is more important than lower unemployment? Would this decisi ...

Question with walmarts success many other stores such as

Question: With WalMart's success, many other stores such as Target, Macy's and Walgreen's decided to implement this strategy and create their own brands. Many consumers opt for these products because they believe that th ...

Industrialization has made america one of the greatest

Industrialization has made America one of the greatest superpowers in the world. But that economic growth and prosperity has come with a price. In the early days of the Industrial Revolution in America factories spewed m ...

Question suppose the capital gains tax rate were cut from

Question: Suppose the capital gains tax rate were cut from 20% to 15%, which boosted the stock market by 5%. Assuming that 20% of the additional gains were realized, calculate the change in capital gains tax receipts und ...

Question what were the fiscal policies from 2000-2010 and

Question: What were the fiscal policies from 2000-2010 and how were they related to macroeconomics? What were the fiscal policy actions and how did it impact the economy through the decade? The response must be typed, si ...

  • 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