Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / 1)When you say "the consumer prefers an equal proportion of consumption and leisure", does that mean that consumption and leisure is one-to- one perfect complements? and when you say "if the consumer likes a fixed proportion of 4 units of consumption and 1 units of leisure", what does its indiffernce curve look like? 2)Consider the following demand and cost information for a firm
1)When you say "the consumer prefers an equal proportion of consumption and leisure", does that mean that consumption and leisure is one-to- one perfect complements?
and when you say "if the consumer likes a fixed proportion of 4 units of consumption and 1 units of leisure",
what does its indiffernce curve look like?
2)Consider the following demand and cost information for a firm. Price Total Cost Marginal Revenue Marginal Cost Profits Quantity 0 1 30 25 20 15 10 WN Total Revenue 0 25 40 3 7 12 18 25 45 4 40 (a) Complete the table above. [8 marks] (b) What is the equilibrium output for this firm? State the profit/loss level at that output. [4 marks) (c) (1) In which market structure is this firm operating? [2 marks] (0) Prove your answer based in the information in the table. [4 marks) State TWO characteristics of the firm. [2 marks)
nitir 24 sic BBM102/03 Microeconomics July 2020 Question 4 (a) Why does a typical monopolistically competitive firm face a downward-sloping demand curve? [3 marks) (b) What is meant by the term "excess capacity" as it relates to monopolistically competitive firms? [7 marks)
Please use this google drive link to download the answer file.
answer 1.https://drive.google.com/file/d/1hlp-gP5IKdL0BaGIHrAjeMAVWzyjpy4f/view?usp=sharing
answer 2.https://drive.google.com/file/d/1NuUmHQaAUKePIxigbtcXkcI_qMQPF3-P/view?usp=sharing
Note: If you have any trouble in viewing/downloading the answer from the given link, please use this below guide to understand the whole process.
https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link
2)
Answer b) Firms profits are maximised at quantity 2, where profits are maximum i.e 28.
Though first condition of profit maximisation is not satisfied which is MR=MC but second condition is satisfying i.e after this level the MC>MR so it isn't profitable for the producer to produce more.
Answer c) i) Monopoly : Monopoly refers to a market situation where there is a single seller selling a product with no close substitutes.
Note: This can also be a monopolistic structure because the properties are same however main difference is that demand curve under monopolistic competition is more elastic under monopolistic competition as compared to monopoly, since we cannot compute elasticity here so it is difficult to find whether it is monopoly or monopolistic .
ii) Under monopoly MR<AR or MR < Price , because more output can be sold only by reducing the prices and from the table we can see that at every quantity MR<AR so this form of market is monopoly.
It is also satisfying the second condition of profit maximisation under monopoly i.e MC>MR after profit maximising output level.
iii) 1. Price maker: In case of monopoly firm has control over industry output. It can influence market price by changing the supply of the product.
2. Price discrimination: A monopolist may charge different prices for his product from different sets of consumers at same time.
Answer 4a) Under monopolistic competition large number of firms sell closely related but differentiated prodi that makes demand curve downward sloping i e a firm can sell more output only by reducing price of the product.
MR<AR under monopolistic competition since more output can be sold only be reducing the price.
Ans 4b) Excess capacity under monopolistic competition means that in long run the long run output of monopolistic firm is less than the socially ideal output which causes the problem of underutilisation of resources.
This happens because monopolistic firms operate on the falling portion of the long run average cost and not on its minimum portion so their long run output is not the one which minimises long run Average cost.please see the link.
