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Exercise Microeconomics

The document contains sample questions and information about production, costs, revenues and barriers to entry. It includes tables and explanations of concepts like average and marginal costs, revenues and profits. Barriers to entry discussed are control over raw materials, patents/copyrights, costs of an efficient plant and government franchises.

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Taufik Daniel
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67 views3 pages

Exercise Microeconomics

The document contains sample questions and information about production, costs, revenues and barriers to entry. It includes tables and explanations of concepts like average and marginal costs, revenues and profits. Barriers to entry discussed are control over raw materials, patents/copyrights, costs of an efficient plant and government franchises.

Uploaded by

Taufik Daniel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PART TWO

QUESTION 1

a)

Number of Total Output Marginal


Workers (unit) Average Product Product
0 0 - 0
1 30 30 30
2 70 35 40
3 120 40 50
4 160 40 40
5 190 38 30

b)

AFC AVC
Output (Unit) TC (RM) FC (RM) VC (RM) AC (RM) MC (RM) (RM) (RM)
0 40 30 10 - - - -
10 60 30 30 6 2 3 3
20 90 30 60 4.5 3 1.5 3
30 130 30 100 4.3 4 1 3.3
40 180 30 150 4.5 5 0.75 3.75
50 240 30 210 4.8 6 0.6 4.2

c)

QUESTION 2

a) The firm is operating in imperfect market because the price is not equal with average revenue
and marginal revenue.

b)
Cost Revenues  
Quantity Price Total Revenue Marginal
Quantity TC (RM) MC (RM) demanded (RM/Unit) (RM) Revenue (RM)
0 100 - 0 170 0 -
1 140 40 1 160 160 160
2 184 44 2 150 300 140
3 230 46 3 140 420 120
4 280 50 4 130 520 100
5 335 55 5 120 600 80
6 395 60 6 110 660 60
7 475 80 7 100 700 40
8 565 60 8 90 720 20

c) The equilibrium output is 1 unit and the price is RM160

d) TR - TC = Profit 160 - 140 = 20 rm20 (Profit)

e)

QUESTION 3

a) i) explicit cost

ii) implicit cost

iii)implicit cost

b) Accounting profit is where it consists of revenue minus explicit costs only while economic profit
consists of revenue minus implicit costs and explicit cost. The accounting profit is more accurate
because the economic profit is hard to estimate. Other than that, the accounting profit will get
measurable results for the period and lastly, The accounting profit will measure the time its actually
occurred.

c)

QUESTION 4

a) Barriers to entry is an economics and business term describing factors that can prevent or
impede newcomers into a market or industry sector. The 4 types barrier of entry are the control
over raw material. A monopoly status can be maintained through control over supply of raw
materials. Other than that is patent and copyright. The patent is an exclusive right to production
oh an innovative product while a copyright is an exclusive right to the author of a book or
composer of a music. The patents and copyrights are granted to encourage firms and individuals
to be original and inventive. The owner of the patent and the copyright has a monopoly over
particular product. Moreover, The cost of establishing an efficient plant. A natural monopoly
exists when one firm can meet the entire market demand at a lower price as compared to two
or more firms. Examples like water and electricity. Lastly is the government franchises. The
government will give exclusive rights to firm to sell certain goods and services in a certain area
such as ASTRO.

b)

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