Hi everybody
I have MicroEconomic Assignment and I need help from somebody who can help me .
please I need it before Tuseday .. If any one help me i will be thankful for him
this is the Questions
Question 1 - Government Intervention in a Market Economy (To answer this question, you should use your textbook and search engines such as google, excite, lycos and yahoo)
Sometimes a government may intervene in a market economy and prevent that market from reaching its equilibrium price. One example of such an intervention is when a government sets a “price floor”.
a. What is a ‘price floor’?
b. State ONE reason why a government imposes a “price floor”.
c. Look at the table below. It shows the supply and demand schedules in the market for maize.
At what price can the government set a price floor that would be binding or effective?
Price per kg | Quantity Demanded (in kg) | Quantity Supplied (in kg) |
| 10 | 100 | 0 |
| 20 | 80 | 30 |
| 30 | 60 | 40 |
| 40 | 50 | 50 |
| 50 | 40 | 60 |
d. What is the effect of the price floor - does the price floor lead to a shortage or a surplus? Of how much?
e. Suppose that instead of being the market for maize, this question was about the market for labour (for workers). A price floor in this market is called the minimum wage and it has the same effect as a price floor in the maize market. What specific name is given to this effect in the market for labour?
Question 2 – The Theory of Consumer Choice
Mariam divides her income between coffee and croissants (both of which are normal goods). Cold weather in Brazil causes a large increase in the price of coffee in the UAE.
a. Draw 2 graphs, each showing the effect of the cold weather on Mariam’s budget line. Place coffee on the x-axis and croissants on the y-axis. No numbers are required.
b. Assume that when the price of coffee increases, the substitution effect for croissants is greater than the income effect.
On your first graph, show the effect of this on Mariam’s optimal consumption combinations (consumer equilibrium points) by including 2 indifference curves in the appropriate positions. Label the first equilibrium point co1 and cr1 and the second equilibrium point co2 and cr2.
c. Assume that when the price of coffee increases, the income effect is greater than the substitution effect for croissants.
On your second graph, show the effect of this on Mariam’s optimal consumption combinations (consumer equilibrium points) by including 2 indifference curves in the appropriate positions. Label the first equilibrium point co1 and cr1 and the second equilibrium point co2 and cr2.
Question 3 - Production The production schedule of Small Toys Ltd, a firm making plastic toys, is described by the following:
Labour (No. of persons employed per week) | Output(Plastic toys per week) |
| 1 | 1 |
| 2 | 3 |
| 3 | 6 |
| 4 | 10 |
| 5 | 15 |
| 6 | 21 |
| 7 | 26 |
| 8 | 30 |
| 9 | 33 |
| 10 | 35 |
a. Calculate the Average Product and Marginal Product of labour.
b. Draw the Average Product and Marginal Product curves on the same graph. Use graph paper.
c. From your graph, state what is the relationship between Average Product and Marginal Product when Small Toys Ltd produces less than 30 toys a week.
d. State what is the relationship between Average Product and Marginal Product when Small Toys Ltd produces more than 30 toys a week.
e. State what is the relationship between Average Product and Marginal Product when Small Toys Ltd produces 30 toys a week.
Thanks..
Comments
Question 1 - Government Intervention in a Market Economy (To answer this question, you should use your textbook and search engines such as google, excite, lycos and yahoo)
Sometimes a government may intervene in a market economy and prevent that market from reaching its equilibrium price. One example of such an intervention is when a government sets a “price floor”.
a. What is a ‘price floor’?
Price floor is a law requiring the price to be above some level , usually above the equilibrium to be binding .
b. State ONE reason why a government imposes a “price floor”.
The government imposes a price floor to protect the suppliers, because a price floor becomes the legal minimum that consumers will have to pay for that good .
c. Look at the table below. It shows the supply and demand schedules in the market for maize.
At what price can the government set a price floor that would be binding or effective?
In order for the price floor to be affective it has to be above the equilibrium level , a price of 50 /kg will be binding
Price per kg
Quantity Demanded (in kg)
Quantity Supplied (in kg)
10
100
0
20
80
30
30
60
40
40
50
50
50
40
60
c. What is the effect of the price floor - does the price floor lead to a shortage or a surplus? Of how much?
Price floor leads a surplus of goods, because at a higher price, suppliers supply more and consumers demand less , leading to a surplus of goods
d. Suppose that instead of being the market for maize, this question was about the market for labour (for workers). A price floor in this market is called the minimum wage and it has the same effect as a price floor in the maize market. What specific name is given to this effect in the market for labour?
A minimum wage leads to unemployment , because at a minimum wage above the equilibrium level , there are more labourers willing to work at that wage , but less employers willing to hire , leading to a surplus of labour supplied in the market causing unemployment .
Question 3 - Production The production schedule of Small Toys Ltd, a firm making plastic toys, is described by the following:
Labour
(No. of persons employed per week)
Output(Plastic toys per week)
Marginal product
Average product
1
1
1
1
2
3
2
1.5
3
6
3
2
4
10
4
2.5
5
15
5
3
6
21
6
3.5
7
26
5
3.71
8
30
4
3.75
9
33
3
3.67
10
35
2
3.5
a. Calculate the Average Product and Marginal Product of labour.
Calculated mp and ap above using the formulas below
b. MP = change in total output = rQ
c. change in # of inputs rL
Average Product, AP = ____Q_____
# of inputs
b. Draw the Average Product and Marginal Product curves on the same graph. Use graph paper.
Plot the point using the table above putting labour on the x axis and output on y axis
Look in ur text for examples
d. From your graph, state what is the relationship between Average Product and Marginal Product when Small Toys Ltd produces less than 30 toys a week.
e. State what is the relationship between Average Product and Marginal Product when Small Toys Ltd produces more than 30 toys a week.
Marginal prodect declines , cost of producing one more tot now higher
e. State what is the relationship between Average Product and Marginal Product when Small Toys Ltd produces 30 toys a week.
Output maximized at 30 toys a week , Marginal product starts declining , lower ouput
Remember
n Whenever MP > AP, AP must be up
n Whenever MP < AP, AP must be down
Thanks i appreciate it
Thank you so much .. i will do