Microeconomics - Question Answers

Running head: MICROECONOMICS
Microeconomics
Name of the Student
Name of the University
Student ID

MICROECONOMICS1
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................6
Answer 3..........................................................................................................................................7
Answer 4..........................................................................................................................................8
Answer 5..........................................................................................................................................9
Answer 6........................................................................................................................................10
Answer 7........................................................................................................................................12
Reference.......................................................................................................................................13

MICROECONOMICS2
Answer 1
(a)
To sell 20 engines per month, Dolan Corporation needs to charge the price shown below
P=2000−50 Q
¿ , P=2000−(50 × 20)
¿ , P=2000−1000
¿ , P=$ 1000
(b)
After the setting price of $500, the number of engines Dolan could sell per month is
P=2000−50 Q
¿ , 500=2000−50 Q
¿ , 50 Q=1500
¿ , Q=30
(c)
Own price elasticity of demand for engines sold by Dolan is given by
Own price elastcicty of demand=
∆ Q
Q
∆ P
P

MICROECONOMICS3
¿ , Own price elastcicty of demand=
30−20
20
500−1000
1000
¿ , Own price elastcicty of demand=
10
20
−500
1000
¿ , Own price elastcicty of demand=
1
2
−1
2
¿ , Own price elastcicty of demand=−1
(d)
Dolan maximize their monthly revenue at the price where marginal revenue (MR) equals
zero. Now, total revenue (PQ) is
Total Revenue (TR)=2000 Q−50 Q2
¿ , dTR
dQ = d (2000Q−50 Q2)
dQ
¿ , MR= d (2000Q−50 Q2)
dQ
¿ , MR=2000−100 Q
Now, putting the value of MR=0 since the revenue maximization occurs where MR equals zero
¿ , 0=2000−100 Q
¿ , 100 Q=2000