College of Business ECON-260 Assignment (Total Marks 20) Note: Attempt all questions Q. 1 Define and differentiate the following: a) Change in demand and change in quantity demand b) Firm demand and industry demand c) Floor pricing and ceiling price d) Relationship between total revenue and elasticity of demand e) Externality and market failure Q. 2 The following equations describe monthly demand and supply relations of a firm Qd = 500 – 5 P Qs = - 100 + 2 P a) At what price level would demand equal zero? b) At what price level would supply equal zero? c) Determine the market clearing price and output level and graphically show it. d) Find elasticity of demand and comment whether it is elastic or inelastic e) Find elasticity of supply and comment whether it is elastic or inelastic f) If firm want to increase its sale by 100,000, what price will it charge? g) If firm increases its price by AED 1, what will be the equilibrium output? Q. 3 Analyze the link between a firm’s production process and its total costs. What are the different types of costs a firm faces in the short run and long run. Q. 4 What are the major differences in perfectly competitive firm and monopoly. List and explain at least four such difference. What criteria a firm will use to produce certain quantity of output. Q.5 Explain why a perfectly competitive firm earns profit in the short run but not in the long run as compared to monopoly which earns profits both in the short and long run.
Solution ID:10086610 | Question answered on 16-Oct-2016
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