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The market for Milk has the following demand and supply schedules:
Price
Quantity Demanded (Milk)
Quantity Supplied (Milk)
$7
155
36
$8
124
63
$9
101
91
$10
88
108
$11
73
120
$12
59
131
d) Graph the cemand and supply curves. What is the equilibrium price and quantity in this market?
e) If the actual price in this market were above the equilibrium price, what would drive the market
toward the equilibrium?
) If the actual price in this market were below the equilibrium price, what would drive the market
tcward the equilibrium?
Denel characteristic
2
. What is the marginal
utility of X?
a) Compare and contrast features of perfectly competitive market with monopolistic competition. (10 marks)
b) Explain the terms Productive efficiency and allocative efficiency with reference to monopolistic completion. (10 marks
You are given the following data concerning the production costs and the average revenue of a profit maximising firm that produces Good X. The fixed costs of production are K100.
Output of good X Short run average costs (AVC) Average Revenue (AR)
1 110 300
2 95 250
3 80 210
4 75 180
5 82 150
6 85 120
7 90 100
8 100 90
9 110 80
10 120 70
a) Given the table above, calculate Total Variable costs (TVC), Total Costs (TC), Marginal costs (MC, Marginal revenue (MR) and profit (loss) at each level of output. (insert extra columns in the table) (10 marks)
b) Determine the profit maximizing level of output. (1 mark)
c) Calculate the smallest rise in TVC that would force the firm to cease production in the short run. (3 marks)
d) Distinguish between the short run and long run periods of production. (6 marks)
Total: 20 marks
marginal cost is the change in
Suppose the demand curve is linear and is given by the equation P = a – bQ where P is price and Q is quantity. What is the consumer surplus if the equilibrium price is P* and equilibrium quantity is Q*?
In September 1993, The Times unilaterally lowered its price …
Price Average Daily Sale
Pre- 09-93 Post-09-93 pre-09-93 post-09-93
Times 45 30 376836 448962
Guardian 45 45 420154 401705
Telegraph 45 45 1037375 1017326
Independent 50 50 362099 311046
2196464 2179039
Total daily newspaper sales (including a few other newspapers not mentioned in the slide) remained constant at about 2.5 million at both pre and post Sep-93.
Compute: Relevant cross-price elasticities of demand for Guardian, Telegraph, and Independent?
How do you ensure that the ceteris paribus assumption has been met here, although approximately?
