Economic Analysis - Assignment Sample
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Added on 2021-05-31
Economic Analysis - Assignment Sample
Added on 2021-05-31
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Running Head: ECONOMIC ASSIGNMENT Economic AssignmentName of the StudentID numberName of the Lecturer
ECONOMIC ASSIGNMENT 1Table of ContentsPerfect Competition (Assumption)..................................................................................................2Perfect Competition (Profit maximization).....................................................................................2Part a: Market equilibrium price and quantity.............................................................................2Part b: Profit maximization of firm.............................................................................................3Part c: Short run and long run equilibrium..................................................................................4Part d: Long run equilibrium price and quantity.........................................................................4Part e: Predicted number of box..................................................................................................6Perfect competition (shut down point)............................................................................................6Part a: Zero economic profit........................................................................................................6Part b: Short run loss under perfect competition.........................................................................7Part c: Short run supply curve.....................................................................................................7Monopoly (profit maximization).....................................................................................................8Part a: Marginal Revenue and profit maximization under monopoly.........................................8Part b: Short run and long run equilibrium................................................................................10Part c: Long run situation..........................................................................................................11Monopolistic Competition (Profit maximization).........................................................................11Part a: Comparison of monopolistic competition and perfect competition...............................11Part b: Introduction of new and innovative product..................................................................12Part c: Flatter demand curve for firm........................................................................................12Part d: Monopolistic competition and inefficiency...................................................................12Oligopoly (kinked demand curve).................................................................................................13Part a: Oligopoly market and kinked demand curve.................................................................13Part b: Cartel..............................................................................................................................13Reference list.................................................................................................................................15
ECONOMIC ASSIGNMENT 2Perfect Competition (Assumption)Share or stock exchange market is regarded as a god example of perfectly competitivemarket because the feature of such markets follow the assumption of perfectly competitivemarket. In the share market, there exist very large number of groups. There a numerous buyers,seller, market makers and public corporation. Buyers in the market are investors makingpurchase of shares. The owners of share are the sellers who are willing to sell their share inexchange of cash. The market is usually large with large number of buyers and sellers with eachhaving no control over the market. Like perfect competition, buyers and sellers in BP sharemarket accept the market-determined price (Beveridge 2013). Each share has equal chance ofmaking profit or loss and is thus identical. This matches the assumption of homogenous goodunder perfect competition. Same as perfect competition sellers and buyers have completeknowledge about the product sold in the market. As the features of BP share market signifyvarious characteristics competitive market, such market is identified as a perfectly competitivemarket.Perfect Competition (Profit maximization)Part a: Market equilibrium price and quantityIn the New Zealand egg market, the demand function is given asP=1000−2QThe corresponding market supply function is P=100+Q
ECONOMIC ASSIGNMENT 3Equilibrium is obtained where demand and supply curve meets. Combination of price and outputin equilibrium is determined as MarketDemand=MarketSupply¿,1000−2Q=100+Q¿,3Q=900¿,Q=300Equilibrium number of eggs in the market is 300.The equilibrium price in the market can be obtained from putting equilibrium quantity in eithermarket demand or market supply function (Carbaugh 2016).Equilibrium price P=100+Q¿100+300¿$400Part b: Profit maximization of firmEquation of marginal cost of egg firm owned by Victor is given as MC = 2q + 1.Profit maximization condition of a single firm under perfect competition is given as Price=MarginalCost¿,400=2q+1¿,399=2q
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