Economics of Enterprise Answers

1. With the price ceiling set P 40, the number of hamburgers that buyers want to buy is 60,000. But the number of hamburgers that is actually bought and sold in the hamburger is only 40,000. Why does the quantity supplied determine the quantity bought and sold in the market? 

What is Indifference Curve, explain with the help of diagram and also explain its properties? (1000 words)

Discuss whether knowledge of price elasticity of demand or price elasticity of supply is more useful for a car manufacturer. 

With the price ceiling set P 40, the number of hamburgers that buyers want to buy is 60,000. But the number of hamburgers that is actually bought and sold in the hamburger is only 40,000. Why does the quantity supplied determine the quantity bought and sold in the market? 

Refer to the graph provided below. You are deciding the optimal number of flower bulbs to plant in your front yard. Your house is by a well-travelled road and people enjoy seeing the flowers in your yard as they pass by. The relevant marginal cost and benefit curves are given below. 

12

14

16

450

350

10

a.      What is the optimal number of bulbs for you to plant if you do not consider the people passing by your house? 

b.         What is the socially optimal number of bulbs for you to plant? 

c.          By how much would the government need to subsidize you per bulb to assure that you will plant the optimal number of flower bulbs? 

What is Indifference Curve, explain with the help of diagram and also explain its properties.

types and examples of elasticity of demand

Suppose Sify broadband is enjoying a monopoly in Delhi as a id is enjoying a monopoly in Delhi as a cable internet provider. They found that there are two primary groups of cust ere are two primary groups of customer identified as businesses and households. The market demand function for business customers Q = 1000-2P, and for households are Q. = 1500-5P, and respectively. They also observed that cost of providing internet is Rs. 100 per customer. a) If the cable internet provider exercises multimarket price discrimination to these two customer groups, determine equilibrium output quantity and price of each group and total profit. b) If Sify decides to charge one price for all, what changes in the volume of profit will you observe?