Text: I need question 3 and 4 ASAP! please
Draw diagrams and give explanations. No explanation, no marks.
Q.1 Demand: Px = 100 - 2Qx
(a) Suppose Px changes from 20 to 10. Given this information, what should I do to increase my revenue? (10 points)
(b) Suppose my income increased from 1000 to 1200 using the P and Q from a. What can you tell about the nature of this product? Are they substitutes or complements? (10 points)
Q.2 Suppose the supply is given as SupplyQx = -10 + Px. If the price floor of 75 is imposed, using the demand curve in the above question:
(i) What would be the equilibrium price and quantity? (10 points)
(ii) What would be the deadweight loss? (10 points)
(iii) If the government has to buy any amount, then what would be the cost to the taxpayers? (10 points)
Q.3 Using the demand and supply given in the above questions, find out the deadweight loss if a quantitative quota of 15 is imposed. Also, find out the quantity supplied and demanded at this quota and the full economic price. (10 points)
Q.4 Suppose M = 2000, Px = 10, and Py = 10.
(a) Find out the real income and relative price for good X. (10 points)
(b) Suppose that good X is now on sale at 50% off and the consumer is only consuming X. Which effect is reflected in this behavior of the consumer and why? (10 points)
Q.5
(a) Fill in the ? boxes in the following table. (10 points)
Q AFCAVCATCMC TC
0 1000 10 29 0.15980 30 33.3 7 3400 4050 105807
(b) Draw the AFCAVC, ATC, and MC curves in one diagram. (10 points)