Microeconomics Answers

 Why do some firms use lots of capital and not much labour, while others use not much capital and lots of labour?

Explain how the marginal product of labour and the average product of labour change as the quantity of labour employed increases. Why does marginal product eventually diminish?

Is a firm technologically efficient if it uses the latest technology? Why?

 How does a single-price monopoly determine the price it will charge its customers? Why can a monopoly make a positive economic profit even in the long run?

 In a perfectly competitive market where there is virtually no product differentiation, what are the priorities or focus of a firm? How could a firm increase profits?

Which industries are highly competitive, give local examples? What are the three types of firm and in which sectors is each type most prominent?

a. Name a product that has a price that adjusted very frequently in the last year. Explain why.                 

b. What is the difference between monopolistic competition and oligopoly? Explain with local   examples. 

  A customer care company is considering replacing human telephone operators with computers.

Create your own example, schedule and graph:

a The average cost curves and the marginal cost curve when the firm uses human operators.

b The average cost curves and the marginal cost curve when the firm uses computers.

‘In perfect competition, marginal revenue equals price’ – explain with examples of product schedule and curves .