Microeconomic Analysis Questionnaire - 2929 Words

BEO2264 MICROECONOMIC ANALYSIS TUTORIAL QUESTIONS TOPIC 1 Question 1 (a) Discuss how microeconomic theory can help to explain the effects of lowering the minimum wage for teenage employees in the retail industry (b) How is the usefulness of a theory evaluated (c) â€Å"Observation without theory and theory without observation are equally useless in explaining the complexities of the real world†. Discuss. Question 2 (a) Distinguish between positive analysis and normative analysis. (b) The following statements were overheard in a conversation between two students. Student A: â€Å"Making unemployed people work for social security benefits is a poor social policy because it is exploitative†. Student B: â€Å"Making unemployed†¦show more content†¦There are four people (A, B, C and D) living on the island. Their preferences are as follows: A has a strong preference for pineapples; B has a strong preference for coconuts; C doesn’t care for any pineapples; and D doesn’t care for any coconuts. (a) For each of the four people, draw a representative indifference curve in a diagram (measure pineapples along the vertical axis). (b) Define the MRS of coconuts to pineapples (MRSC,P). (c) Discuss the shape of each indifference curve you have drawn for part (a) and relate them to the MRSC,P. Question 4 The utility function that Jane receives by consuming food and clothing is given by U= F*C. (a) In a diagram, draw the indifference curves associated with utility levels of 12 and 24 (measure clothing along the horizontal axis). (b) Suppose that the price of food is $1 per unit and the price of clothing is $3 per unit, and Jane has $12 to spend. Graph the budget line that Jane faces in the diagram you have drawn for part (a). (c) From your diagram, find Jane’s utility-maximising choice of food and clothing. (d) What is the MRSC,F at the point of utility maximisation? TOPIC 4: INDIVIDUAL AND MARKET DEMAND ___________________________________________________________________________ Question 1 What is; (a) A price consumption curve (b) An income consumption curve (c) An Engel curve (d) An inferior good Question 2 Scott consumes only two goods steak and beer. When the price of steakShow MoreRelatedMeasuring Price Sensitivity And The Macroeconomic Environment Essay1625 Words   |  7 Pagesstudies detailing the relationships and microeconomic factors between price sensitivity and the macroeconomic environment. This report explored each category listed below, as businesses, in particular, XYZ Company, must use microeconomic principles to make and validate decisions based on the following factors: price elasticity, consumer choices, production and costs, supply and demand, aggregate supply and aggregate demand, and macroeconomic measurements. 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