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Microeconomics Topics & Concepts Covered

Supply and Demand Law of Demand
Elasticity of Demand Price Elasticity of Demand
Consumer Behavior Marginal Utility
Production and Costs Total Cost
Market Structures Monopoly
Market Failure and Government Intervention Externalities
Consumer and Producer Surplus Producer Surplus
Game Theory Nash Equilibrium

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Recently Asked Microeconomics Questions

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  • Q1:Consider the optimization problem: Question 3 f(x, y) = 20 - 2x + 3xy s. t. 4x + 2y = 100See Answer
  • Q2:Given f(x,y) = 5x² + 8x³y + 3y 4, match the partial derivative with the expression on the right. df (x,y) 10x + 24x² дх - * f'2(x,y) = 02(x,y) дхду А. B. 24x2 C.gr3+ 12y 3See Answer
  • Q3:Given f(x,y) = x³ +5x2-3y+y³, the local minimum is ( ). Round your answer to 4 decimal places. ) and the local maximum is (See Answer
  • Q4:2. For each of the explanatory variables, P, CP, M and PE, calculate the respective demand elasticities for Hind Oil Industries’ product in the month September 2015. Remember to show all calculations. What additional information about Maa mustard oil do these values provide?See Answer
  • Q5:3. What would be the impact of a price change by Hind Oil Industries on the total revenue of Maa mustard oil, keeping other variables constant? See Answer
  • Q6:1. Analyze the estimated demand function by using the estimated coefficients to discuss the impact of each of the explanatory variables, P, CP, M, and PE, on the quantity of Maa mustard oil demanded. In discussing the impact, consider a one unit change in each variable while holding the others constant.See Answer
  • Q7: 5. (6 points) Suppose when we look at the monthly sales of hamburgers & fries in the Devil's Den, we see that when CCSU increased the price from $7 to $13, the quantity demanded fell from 8,000 meals to 4,000 meals.See Answer
  • Q8: 2. An early freeze in California sours the lemon crop. Explain what happens toconsumer surplus in the market for lemons. Explain what happens to consumersurplus in the market for lemonade. Illustrate your answers with diagrams.See Answer
  • Q9:Explanation of below graph Price Supply Curve Demand Curve QuantitySee Answer
  • Q10:Question 3 presents the fixed cost and variable cost A producer of optical fibre for telecommunication associated with his production in the table below. The unit price of the optical fibre is solely determined by market forces. Complete the table below. Round your answers to two decimal places where applicable. Round answers to two decimals.See Answer
  • Q11:Question 4: Calculate the following given the information in a four-sector macroeconomic model: Autonomous Consumption = 50 Investment = 20 Government spending = 40 Consumers have a marginal propensity to consume of 80 per cent. a.) Macro-equilibrium income using the income/spending approach b.) The new equilibrium income if investment decreases with 10. Make use of the multiplier. See Answer
  • Q12:Question 5 Calculate the following given the information in a four-sector macroeconomic model: Autonomous Consumption = 100 Tax = 10 Investment = 10 Government spending = 30 C Consumers spend 75c of each rand. a.) Macro-equilibrium income using the injection/leakage approach. b.) The new equilibrium income if investment increases with 20. Make use of the multiplier. See Answer
  • Q13:1. Consider a firm producing widgets using capital and labor. The graph below illustrates the isoquant for producing 10 widgets, the firm's total expenditure line, and the cost minimizing combination of capital and labor used to produce 10 widgets given the wage and cost of capital. a. Suppose the wage (w) is $10 and the cost of capital (v) is $15. What is the average total cost of producing 10 widgets when they are produced in the least-cost way? b. Still using w=$10 and v=$15, what is the Rate of Technical Substitution at the point K-6 and L=8? How do you know? c. Suppose that, at K-6 and L=8, the marginal product of labor is 20. Continue using w=$10 and v=$15. What is the marginal product of capital at this point? How do you know? d. Suppose the wage rises to $15. Draw a new total expenditure line representing the least-cost way of producing q=10, based on this new wage and the original cost of capital (v=$15). How will the new least- cost method of producing q=10 change now that the wage has changed? See Answer
  • Q14:2. Production Functions: Let the production of the IPhone 12 be described by this production function: Q=100 √KL Where Q is phones produced, K is capital (measured in machine-hours used) and L is labor (measured in labor hours). a. Graph the Q = 2000 isoquant: Set labor to 10, 20, and 40, and find the corresponding values of K. Plot these values on your isoquant. b. What can you say about the relative magnitude of rate of technical substitution at L=10 and at L=40? Is the RTS greater in magnitude at L=10 than at L=40? Lower? The same? Explain. (I'm not asking for specific values, just the ranking.) c. Suppose technical progress generates a new production function: Q= 200 √KL Plot the new Q-2000 isoquant, again solving for K in terms of Land plotting and labeling the K and L combinations for L = 10, 20, and 40. Describe how this technological change affects the isoquant. (5) d. Consider a different kind of technological change: suppose that the invention of robots with artificial intelligence effectively makes capital and labor "perfect substitutes" in the production of IPhones. How would this technological change affect the shape of the isoquants for IPhone production? How might it affect the choice of K and L to produce IPhones at any given ratio of wages to capital costs? Explain. (5) 3. Cost curves, profits and losses: a. Draw short run average cost and marginal cost curves (costs on the vertical axis, q on the horizontal axis) for a firm characterized by an "efficient scale of production" (so average total cost falls at first as output increases, and then it rises at high levels of output). Draw these curves so that the minimum average cost = $6 and is found at q=10. Label everything clearly. b. Suppose this firm faces a market price for its good of $7, and that it can sell as many units as it wishes at this price. Add this price to your graph above, illustrate the amount of output the firm will choose to produce (not a specific value, but just a point in your graph), and identify the area on your graph that corresponds to the firm's profit at this price. c. Redraw your graph from part (a), and now suppose the market price is $5. Again, illustrate the level of output the firm will choose and the area corresponding to the firm's loss at this price. d. Continuing with the scenario in which the price is $5: Should the firm immediately shut down production due to its short-run losses, or might it be best for the firm to continue to operate in the short run? Explain. See Answer
  • Q15:Section A Question A1. Explain the difference between covered and uncovered interest parity. Question A2. What are the benefits, in terms of the efficiency of financial intermediation, provided by banking globalisation? Question A3. Explain the financial trilemma. How can regulatory wars be avoided? Provide an example involving international agreements. Question A4. Explain how budget deficits may create a negative cross-border externality which, in turn, may hamper international fiscal policy coordination.See Answer
  • Q16:Answer all questions clearly and succinetly.Provide intermediate derivations whereneeded,but do not exceed 9 pages,graphs ineluded,in your answers.Consider a small open economy producing a(composite)good which is an imperfectsubstitute for a foreign good.There are five categories of agents:firms,houscholds,commercialbanks,the central bank,and the goverment.The world price of the foreign good is taken asexogenous and normalized to unity.The nominal exchange rate is fixed at E.The supply of the domestic good is given by(1)Y=YPD).where p is the price of the domestic good and Y"=dY"/dpb>0.See Answer
  • Q17:Charlie has an income of f100,000 each in both period 1 and period 2.His utility function isgiven by U(C1,2C2)=c5,where C1 and c2 denote the amount he spendsonconsumption in period 1 and period 2 respectively.(a)Write an equation that describes Charlie's budget constraint when the interest rate forborrowing and lending is 2%and there is no inflation.If Charlie chooses the optimalamount of borrowing or saving,how much will he consume in each period?Show thebudget constraint and indifference curve passing through his consumption choicediagrammatically with C1 on the horizontal axis.(b)Calculate and explain Charlie's optimal consumption choice in each period if the interest(15%)rate increases to 20%and show this on your diagram.(c)Calculate the interest rate that would result in Charlie choosing the same level of(20%)consumption in both periods.Provide an intuition for your answer.(15%)See Answer
  • Q18:2. In a small college town there is only one movie theater. If the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movie. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movies in the town is characterized by PT = 45 _QT 60 a. Draw the market demand curve, the marginal revenue curve, and the marginal cost curve. Make sure to label the axes, curves, and intercepts. b. Find the profit-maximizing price and quantity of movie tickets and indicate them on your graph. How much would the theater make in profits? c. Calculate the deadweight loss caused by the monopoly and indicate the area on your graph.See Answer
  • Q19:(3) What are the optimal prices for Microsoft to charge for Word and Excel if it only sells the two products separately?See Answer
  • Q20:(4) Can Microsoft earn greater profits if it sells the two products as a bundle? See Answer
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