Exams with solutions
Microeconomics
Exam 1
Question 1:
A market demand curve is given by Qd = 100 - P. A market supply curve is
given by Qs = P. What is the equilibrium price and quantity in this market?
Solution:
To find the equilibrium price, we set the demand and supply curves equal to
each other and solve for P.
Qd = Qs
100 - P = P
Solving for P, we get P = 50.
To find the equilibrium quantity, we substitute the equilibrium price back
into either the demand or supply curve.
Qd = 100 - 50
Qd = 50
The equilibrium price is 50 and the equilibrium quantity is 50.
,Question 2:
A firm in a competitive market has a production function given by Q = 2L.
The firm's cost function is given by C = 4L. What is the firm's profit-
maximizing output and price?
Solution:
To find the firm's profit-maximizing output, we take the derivative of the
firm's profit function and set it equal to zero.
π = (P - 4L) * 2L
π' = (P - 4L) * 2 - 4(2L)
π' = 2P - 8L
0 = 2P - 8L
2P = 8L
P = 4L
To find the firm's profit-maximizing price, we substitute the profit-
maximizing output back into the firm's demand curve.
P = 4(4L)
**P = 16L
The firm's profit-maximizing output is 4L and the profit-maximizing price is
16L.
Question 3:
A government imposes a tax of $10 per unit on a good. The market demand
curve for the good is given by Qd = 100 - P. The market supply curve for the
good is given by Qs = P. What is the effect of the tax on the market price
and quantity?
Solution:
The tax shifts the supply curve up by $10. The new supply curve is given by
Qs = P + 10.
,To find the new market price, we set the demand and supply curves equal to
each other and solve for P.
Qd = Qs 100 - P = P + 10
Solving for P, we get P = 60.
To find the new market quantity, we substitute the new market price back
into either the demand or supply curve.
Qd = 100 - 60 Qd = 40
The tax increases the market price to $60 and decreases the market quantity
to 40.
Exam 2
Question 1:
A firm in a monopoly market has a cost function given by C = 4Q. The
firm's demand curve is given by P = 100 - Q. What is the firm's profit-
maximizing output and price?
Solution:
To find the firm's profit-maximizing output, we take the derivative of the
firm's profit function and set it equal to zero.
π = (P - C) * Q
π = (100 - Q - 4Q) * Q
π = 96Q - 5Q^2
π' = 96 - 10Q
, 0 = 96 - 10Q
10Q = 96
Q = 9.6
To find the firm's profit-maximizing price, we substitute the profit-
maximizing output back into the firm's demand curve.
P = 100 -
Exam 3
Question 1:
A firm in a perfectly competitive market has a demand curve given by P =
100 - Q. The firm's marginal cost curve is given by MC = 20. What is the
firm's profit-maximizing output and price?
Solution:
To find the firm's profit-maximizing output, we set the marginal cost curve
equal to the market price.
MC = P
20 = 100 - Q
Q = 80
To find the firm's profit-maximizing price, we substitute the profit-
maximizing output back into the firm's demand curve.
P = 100 - Q
Microeconomics
Exam 1
Question 1:
A market demand curve is given by Qd = 100 - P. A market supply curve is
given by Qs = P. What is the equilibrium price and quantity in this market?
Solution:
To find the equilibrium price, we set the demand and supply curves equal to
each other and solve for P.
Qd = Qs
100 - P = P
Solving for P, we get P = 50.
To find the equilibrium quantity, we substitute the equilibrium price back
into either the demand or supply curve.
Qd = 100 - 50
Qd = 50
The equilibrium price is 50 and the equilibrium quantity is 50.
,Question 2:
A firm in a competitive market has a production function given by Q = 2L.
The firm's cost function is given by C = 4L. What is the firm's profit-
maximizing output and price?
Solution:
To find the firm's profit-maximizing output, we take the derivative of the
firm's profit function and set it equal to zero.
π = (P - 4L) * 2L
π' = (P - 4L) * 2 - 4(2L)
π' = 2P - 8L
0 = 2P - 8L
2P = 8L
P = 4L
To find the firm's profit-maximizing price, we substitute the profit-
maximizing output back into the firm's demand curve.
P = 4(4L)
**P = 16L
The firm's profit-maximizing output is 4L and the profit-maximizing price is
16L.
Question 3:
A government imposes a tax of $10 per unit on a good. The market demand
curve for the good is given by Qd = 100 - P. The market supply curve for the
good is given by Qs = P. What is the effect of the tax on the market price
and quantity?
Solution:
The tax shifts the supply curve up by $10. The new supply curve is given by
Qs = P + 10.
,To find the new market price, we set the demand and supply curves equal to
each other and solve for P.
Qd = Qs 100 - P = P + 10
Solving for P, we get P = 60.
To find the new market quantity, we substitute the new market price back
into either the demand or supply curve.
Qd = 100 - 60 Qd = 40
The tax increases the market price to $60 and decreases the market quantity
to 40.
Exam 2
Question 1:
A firm in a monopoly market has a cost function given by C = 4Q. The
firm's demand curve is given by P = 100 - Q. What is the firm's profit-
maximizing output and price?
Solution:
To find the firm's profit-maximizing output, we take the derivative of the
firm's profit function and set it equal to zero.
π = (P - C) * Q
π = (100 - Q - 4Q) * Q
π = 96Q - 5Q^2
π' = 96 - 10Q
, 0 = 96 - 10Q
10Q = 96
Q = 9.6
To find the firm's profit-maximizing price, we substitute the profit-
maximizing output back into the firm's demand curve.
P = 100 -
Exam 3
Question 1:
A firm in a perfectly competitive market has a demand curve given by P =
100 - Q. The firm's marginal cost curve is given by MC = 20. What is the
firm's profit-maximizing output and price?
Solution:
To find the firm's profit-maximizing output, we set the marginal cost curve
equal to the market price.
MC = P
20 = 100 - Q
Q = 80
To find the firm's profit-maximizing price, we substitute the profit-
maximizing output back into the firm's demand curve.
P = 100 - Q
