Microeconomics

Running head: Microeconomics
Microeconomics
Name of the Student
Name of the University
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Microeconomics1
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................2
Answer 3..........................................................................................................................................6
References........................................................................................................................................7

Microeconomics2
Answer 1
A firm operating in inelastic portion of demand is not maximizing profit because in order
to maximize profit the firm need to increase its output quantity. However, inelastic demand curve
a slight increase in output quantity will reduce the price by much larger amount and as a result
the total revenue of the firm decreases (Schwartz et al. 2019). Therefore, the firm would not be
able maximize its profit by operating at inelastic portion of demand curve. Inelastic demand
curve is not an ideal situation for a profit maximizing firm.
Answer 2
(a)
Demand function given:
Q=400−3 P+ 4 T + 0.6 A
Therefore, at P=0 and other things as given Q is given as
Q=400−(3 ×0)+(4 × 8000)+(0.6 ×10000)
¿ , Q=400−0+ 32000+6000
¿ , Q=384 00
Again, if Q=0 and other things as given then P is given as
Q=400−3 P+(4 × 8000)+(0.6 × 10000)
¿ , 0=38 400−3 P
¿ , 3 P=38 400