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Examples

The document provides 13 examples of microeconomics problems involving concepts like production functions, total cost curves, marginal cost, budget constraints, indifference curves, and profit maximization. The examples require calculating quantities like marginal costs, average variable costs, budget lines, marginal rates of substitution, and profit-maximizing output levels. They involve tools like production functions, total cost curves, indifference curves, and factor price ratios.

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TANMAY SHARMA
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43 views

Examples

The document provides 13 examples of microeconomics problems involving concepts like production functions, total cost curves, marginal cost, budget constraints, indifference curves, and profit maximization. The examples require calculating quantities like marginal costs, average variable costs, budget lines, marginal rates of substitution, and profit-maximizing output levels. They involve tools like production functions, total cost curves, indifference curves, and factor price ratios.

Uploaded by

TANMAY SHARMA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Examples:

1. If Green Acres Turf Farm’s total cost of producing acres of sod is TC = 4Q^2 + 25Q + 30,
the marginal cost of producing the 20th acre of sod is (the symbol "^" means that Q is raised
in the power of 2)

2. A firm has the production function Q = X^0.5 Y. In the short run it must use exactly 15
units of Y. The price of X 1 is $75 per unit and the price of Y is $2 per unit. The firm’s short-
run marginal cost function is (the "^" symbol below denotes that Q is raised in the power
of...)

3. Mr. Dent Carr’s total costs are 2s^2 + 40s + 40. If he repairs 10 cars, his average variable
costs will be

4. A firm has the short-run total cost function c(y) = 4y2 + 100. At what quantity of output is
short-run average cost minimized?

5. The marginal cost curve of a firm is MC = 6y. Total variable costs to produce 10 units of
output are

6. If you have an income of $40 to spend, commodity X costs $4 per unit, and commodity Y
costs $8 per unit, then the equation for your budget line can be written

7. Ernie’s utility function is U(x, y) = 32xy. He has 10 units of good x and 8 units of good y.


Waldo’s utility function for the same two goods is U(x, y) = 3x + 5y. Waldo has 9 units of x
and 13 units of y

8. Ambrose has an indifference curve with equation x2 = 20 − 4x1/21. When Ambrose is
consuming the bundle (x1,x2)=(4, 16), his marginal rate of substitution is 25/4.

9. Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and
the price of Y was $4. If the price of X rose to $3 and the price of Y rose to $8, how much
would Murphy’s income have to rise so that he could still afford his original bundle?

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10. A competitive firm produces output using three fixed factors and one variable factor.
The firm’s short-run production function is q = 305x − 2x2, where x is the amount of variable
factor used. The price of the output is $2 per unit and the price of the variable factor is $10
per unit. In the short run, how many units of x should the firm use

11. A competitive firm’s production function is f(x1, x2) = 12x1/21 + 4x1/22. The price of factor 1
is $1 and the price of factor 2 is $2. The price of output is $4. What is the profit-maximizing
quantity of output?
12. the production function is given by f(x)  4x1/2. If the price of the commodity produced
is $100 per unit and the cost of the input is $15 per unit, how much profit will the firm make
if it maximize profits?

13. the production function is f(x1, x2)  x1/21x1/22. If the price of factor 1 is $14 and the
price of factor 2 is $7, in what proportions should the firm use factors 1 and 2 if it wants to
maximize profits?

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