Econ.

201 Final Assigment for the semester (15% of final grade)

Direction: Answer all questions. Please be reminded of clarity and orderly presentation of
materials to avoid reduction in points.
1. Illustrate and explain how increase in consumer’s income will affect the market of a
normal good, other things being equal.
2. The table below shows the supply schedule for rice over certain period.
Price/50kg bag (LS) Quantity supplied (50kg bags)
30 100
40 150
50 160

Using the above table, calculate the co-efficient and identify the nature of price elasticity f
supply for rice when:
I. Price increases from L$30 to L$40
II. Price increases from L$40 to L$50
3. List FOUR properties of an indifference curve.
4. Illustrate and explain consumer equilibrium under indifference curve theory.
5. Draw the demand curve of monopoly firm, explaining the reason for its shape.
6. State TWO market conditions that will make it possible and easier for the monopolist
to engage in price discrimination.
7. Briefly explain three(3) sources of monopoly power.
8. Describe the condition under which a perfect competitive firm will shut down
operations.
9. Explain the concept of total revenue, average revenue and marginal revenue.
10. With the aid of relevant graphs, explain the relationship between short run average
cost curve and marginal cost curve.
11. If Mr. Weetol’s budget line has intercepts 20X and 30Y and Py = $10, what is Mr.
Weetol’s income? What is Px? What is the slope of the budget line?
12. Show by indifference curve analysis the choice of one couple not to have children
and of another couple, with the same income and facing the same costs of having
and raising children, to have one child.
13. Complete the table below:
Output TFC TVC TC AVC ATC MC
0 100 0
1 40
2 64 164
3 80
4 88
5 96
14. Suppose an individual has an income of $15 per time period, the price of good X is $1
and the price of good Y is also $1.
a. Write the equation of the budget line of this individual in the form that indicates
that the amount spent on good X plus the amount spent on good Y equals the
individual’s income.
b. Plot the budget line.
15. Why is a market considered to be imperfect?
 16. Compare and contrast the private limited company with the public limited company.
17. Write short notes on each of the following:
a. Export promotion
b. Import substitution
c. Tariffs
d. Quota.
18. Explain the relationship between average cost, marginal cost and price in a perfectly
competitive market.
19. Explain the law of diminishing marginal utility and state the economics importance of
the law.
20. What factors affect the demand for a commodity?
21. ‘A demand curve slopes downward from left to right.’ Under what conditions would
there be exceptions to this statement?
22. State the law of diminishing returns. Explain with the aid of a table or suitable
diagram how it applies to rice production.
23. Janice spends her entire weekly food allowance of $42 on hamburgers and soft
drinks. The price of a hamburger is $2, and the price of a soft drink is $1. Janice
purchases 12 hamburgers and 18 soft drinks, and the marginal rate of substitution
between hamburgers and soft drinks is 1. Is Janice in equilibrium? Explain. Write the
equation for Janice budget line and plot the budget line.
24. If Musu is indifference between Coke and Pepsi, what would Musu’s indifference
curves look like?
25.

Indifference Schedule
Combination Quantity of X Quantity of Y
A 3 12
B 4 7
C 6 4
F 9 2
G 14 1
a. plot the indifference curve.
b. Determine the marginal rate of substitution from
point C to F.
26. The output and cost of production of rice (in bags) are presented in the table below.
Use the information in the table to answer the questions that follow.
Output of Rice(in 0 1 2 3 4
bags)
Total Variable 0 5 7 10 20
cost(TVC)
Total Cost(TC) 7 12 14 17 27
(a)Calculate
I. Average Fixed Cost at output levels 0,2, and 4.
II. Marginal Cost(MC) at all levels of output.
(b) If the price of a bag of rice were $10
I. Calculate the profit/loss at all levels of output.
II. At what output level(s) is the maximum profit made?
 (c) Draw the marginal cost curve.
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27. Suppose A = 5, α = β = and K = 8 and is held constant. Use the Cobb – Douglas
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production function and derive the total product, Average product of labor and the
marginal product of labor schedule.
28. How does the shape of the monopolist’s demand curve differ from that of a perfectly
competitive firm? Why?
29. A) What forces limit the monopolist’s market power in the real world?
B) Why would a monopolist advertise its product if it has a monopoly power over the
market?
30. Write short notes on each of the following:
e. Oligopoly
f. Duopoly
g. Monopolistic competition