Consider a consumer who consumes two good- X and Y - where X is an inferior (but NOT Giffen good. Consider an initial equilibrium where with an income of 100 and individual consumes 10 units of X and 12 units of Y . Now, suppose the price of the good X increases, keeping everything else unchanged. Draw a clearly labelled diagram and indicate the range of the new equilibrium due to price change. [Note: only a clean graph is required and the information that are NOT given are NOT necessary.]
(a.) Consider a consumer who consumes two good- X and Y - where X is an inferior (but NOT Giffen good. Consider an initial equilibrium where with an income of 100 and individual consumes 10 units of X and 12 units of Y . Now, suppose the
(b.) A monopolist- who sells microprocessors in an entire Indian market- charges INR 1200 per unitand sells 1.213 million units in the country. The firm is a recent entry- so the economists are not sure about the demand curve for the Indian market, except that it is a linear curve. Can you comment anything about the elasticity at the equilibrium? Specifically, does the equilibrium lie in the elastic or the inelastic part of the demand curve?
(c.) Consider a monopolist who serves a market given by: P(Q) = 100 − 2Q. However, the monopolist produces the product in two different plants- with cost function C1(q1) = 2q 21 and C2(q2) = q22/2, where Q = q1 + q2. What is the equilibrium quantity sold by the monopolist and what price is charged? How much is produced in each firm?
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