QUESTION ONE

The demand and supply function are given by the following functions: 𝑄𝑥𝑑 = 500 − 2𝑝𝑥 , 𝑄𝑥𝑠 =
−10 + 3𝑝𝑥 .

a) Determine the max price consumers are willing to pay for the good.
b) Calculate the minimum price the producers are willing to accept to begin supplying output.
c) Calculate the equilibrium price and output.
d) Calculate the consumer and producer surplus.

QUESTION TWO

John has a farm that produces cabbages and sells in a competitive market. The price in the market is
K50 per cabbage. John faces a production cost function 𝐶 = 5 + 5𝑄 2 .

a) Determine the profit max level of output.

b) What price will john charge for the cabbages he produces.
c) Calculate the profit/loss john makes.
d) What dynamics will john expect from (c)

QUESTION THREE

Firm ABC is a monopoly in Beula land and faces the entire demand as represented by the inverse
demand of 𝑃 = 100 − 𝑄. The cost function faced by Firm ABC is given 𝐶 = 5 + 4𝑄 2 .

a) Determine the profit max level of output.

b) What price will the public be willing to pay for the output in (a)
c) Determine the profit Firm ABC makes.

QUESTION FOUR

The cost function of producing cement is given by 𝐶 = 20 + 4𝑄 2 .

a) Calculate the fixed cost of producing 100 units of output.

b) Calculate the average fixed cost of producing 100 units of output.
c) What is the average total cost of producing of producing 100 units of output.
d) Compute the marginal cost of producing and additional unit of output.

END OF TURORIAL