Microeconomics

  

1. Calculate different costs of production by a firm which makes tires for cars:

Quantity  Total Fixed Cost  Total Variable Cost

0   200 €  0

1    200   55

2   200   75

3   200   95

4   200   145

5   200   205

6   200   365

a. Calculate the following: marginal cost, average total cost average variable cost, average fixed cost, at every level of production.

b. Make a graph all three curves. What is the relationship between the marginal-cost curve and the average-total-cost curve? And between the marginal-cost curve and the average-variable cost curve? Explain in detail.

2. Consider a demand schedule for sandwiches is as follows:

Quantity Demanded  Quantity Demanded

Price  (income  24,000 €)  (income  28,000 €)

8  32    42

10  24  37

12  16  22

14   8  12

16   5 10

a. Calculate price elasticity of demand as the price increases from 8 € to 10 € if your income is 24,000 and your income is $28,000.

b. Calculate income elasticity of demand as income increases from 24,000 € to 28,000 € when the price is 12€ and the price is 16 €.

3. A and B are two food companies. They make cheese and ham. A takes 6 hours to make 1 kg of cheese and 2 hours to make 1 kg of ham. B takes 6 hours to make 1 kg of cheese and 4 hours to make 1 kg of ham.

a. Calculate the opportunity cost of making ham and cheese. Who has the absolute advantage in making ham? Who has the comparative advantage in making cheese?

b. If both trade food with each other, who will trade away cheese in exchange for ham?

c. The price of ham can be expressed in terms of cheese. What is the highest price at which cakes can be traded that would make both companies better off? What is the lowest price? Explain.

4.  Classify the following markets (monopoly, oligopoly, monopolistic competition, and perfect competition) for these products? Explain in detail each type of market for every product. 

a. telecommunications

b. copper

c. lipstick

d. movie streaming movies

Formalities:

· Word count = 1000-1500

· Cover, Table of Contents, References and Appendix are excluded of the total word count.

· Font: Arial 12 pts. 

· Text alignment: Justified.