Economics Answers

Explain using properly labelled diagrams, why a perfectly competitive firm will earn only normal profit in the long-run.

If we were to say that two variables are positively related, this means that:
a) The relationship between the two would graph as a line sloping downward.
b) The relationship between the two would graph as a horizontal line.
c) The relationship between the two would graph as a line sloping upward.
d) The relationship between the two cannot be depicted graphically in any simple way.

lonelwolf Ltd is the sole manufature and supplier of solar panels in the country.As a result of this the CEO claimed a recent meeting that he can set any price he wishes and sell as many units of his product as he wants at that pric.Is this correct? motivate your answer

Nonjabulo thinks that McDonald’s hamburgers are the best – much better than Steers’ – while Anne cannot tell the difference:
a) Anne’s demand for McDonald’s hamburgers is likely to be more price elastic than Nonjabulo’s.
b) Nonjabulo’s demand for McDonald’s hamburgers is likely to be more price elastic than Anne’s.
c) Anne’s demand for all hamburgers is less price elastic than Nonjabulo’s.
d) Nonjabulo’s demand for all hamburgers is more price elastic than Anne’s

a decrease in the price of fertilizers and a concurrent increase in the demand for apple juice

The following graph shows a firm in a monopolistic industry.
a. If the firm aims at maximizing profit, what will be the quantity produced by the firm
and the price it charges?
b. If the firm aims at maximizing revenue, what will be the quantity produced by the
firm and the price it charges?

1. A community in Northern Namibia produces only two goods, Radio and DVDs. With the aid of properly labelled production possibilities curves illustrate each of the following(putting Radios on the vertical axis)

1.1. A shift in production from Radios (services) towards DVDs(goods)
1.2. An increase in the potential output of the community due to a greater availability of the factors of production.

2. Using well labelled diagrams, explain how the equilibrium price and equilibrium quantity of quava change as a result of the following:
2.1. A change in the wages of farm workers from R 150 per day to R 200 per day.
2.2. A decrease in the price of fertilizers and a concurrent increase in the demand for Quava juice.

1. Lonewolf ltd is the sole manufacturer and supplier of solar panels in the country. as a result of this the CEO claimed in a recent meeting that he can set any price he wishes and sells as many units of his products as he wants at that price. is this correct? Motivate your answer.

2. Explain using properly labelled diagrams, why a perfectly competitive firm will earn only normal profit in the long-run.

3. Explain SEVEN(7) conditions necessary for a perfectly competitive market to exist.

Given the supply function:
Q = 150 + 5P + 0.1√(2)
Find price elasticity of supply when P = 10

1.what determines the amount of output in the economy?
2.explain how a competitive,profit-maximizing firm decides how much of each factor of production to demand.