Ask a question from expert

Ask now

Microeconomics Assignment with Answers and Analysis

17 Pages1791 Words432 Views

Added on  2023-06-08

About This Document

This article provides detailed answers and analysis for Microeconomics Assignment. It covers topics such as perfect competition, short-run and long-run equilibrium, supply and demand curves, and more. The article also includes graphs and diagrams to help understand the concepts better. The answers are provided in a step-by-step manner, making it easy for students to follow. The article cites relevant sources for further reading.

Microeconomics Assignment with Answers and Analysis

   Added on 2023-06-08

BookmarkShareRelated Documents
Microeconomic Assignment
Name of the Student
Name of the University
Author Note
Microeconomics Assignment with Answers and Analysis_1
Answer to Question 3
Firm A
AR= undefined, 10, 10, 10, 10, 10, 10
MR= 10, 10, 10, 10, 10, 10
MC= 12, 8, 10, 16, 24, 40
AC= undefined, 42, 25, 20, 19, 20, 26.6
Firm B
AC= INFINITE, 134, 77, 59, 54, 53.2, 61
MC= 34, 20, 23, 39, 50, 100
MR= 130, 110, 90, 70, 50, 30, 20
Firm A= operating in short-run
Firm B= operating in short-run
Firm A= perfect competition
Firm B= imperfect competition
Firm A= output level is 3
Microeconomics Assignment with Answers and Analysis_2
Firm B= output level is 5
Firm A= The minimum of average cost curve (19,4) is above the profit maximisation point
(50,3). Thus, the firm will incur losses.
Firm B= The firm is also making supernormal profits in the short run.
Microeconomics Assignment with Answers and Analysis_3
Answer to Question 6
(Rubinfeld and Pindyck 2013)
Suppose for some exogenous reason, the demand curve increases from D1 to D2. This
will increase prices from P1 to P2. As prices increases, the profits incurring to the firms also
increases. This will lead to the entry of new firms. As there exists constant cost structure, the
cost curves will not shift. The entry of the new firms will lead to increase in supply from S1
to S2. This entry will occur until there in zero profits in the industry. Therefore, Prices
remains same and the industry output increases to Q2. The long run curve is fully elastic in
The case of increasing cost is quite different from the constant cost industry. Suppose
because of some external factor the demand in the market increases from D1 to D2. Because
of this, prices increases from P1 to P2. Thus, existing firm now enjoys supernormal profit.
This will lead to entry of new firms in the industry. Because of the increasing cost structure
Microeconomics Assignment with Answers and Analysis_4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Monopoly Market Structure: Advantages and Disadvantages

Assignment on Economics PDF

Monopoly & Monopolistic Competition in Australia

Microeconomics and Macroeconomics

Principles of Economics

Economies of New Zealand