Plot the marginal revenue curve

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Principles of Economics Short Answer Questions

Question 1: Refer to Chapter 6- Imperfect Competition

(a) Define and explain with an example why firms resort to product differentiation under monopolistic and oligopolistic market structures. (1.5 marks each= 3 marks)

(b) In Table 1 below, an oligopolistic firm faces two demand schedules. The current price is given as $185. Study the table and answer the following questions:

(i) What would the demand curve be under the kinked demand curve hypothesis? Explain.

(ii) Plot the marginal revenue curve corresponding to the kinked demand curve and explain.

(iii) Given that Marginal Cost is $150 at every level of output, copy the table and calculate Marginal Revenue. Determine the profit-maximising level of output and plot it on the graph.

Table-1

Competitors Quantity Demanded

Price ($)

Competitors follow: Quantity Demanded

Total Revenue Column 1x2

Marginal Revenue (MR)

Marginal Cost (MC)

20

200

35

4000



30

195

40

5850



40

190

45

7600



50

185

50

9250



60

180

55

10,800



70

175

60

12,250



Question 2: Refer to Chapter 7- Market Failure and Government Policy

(a) Define, illustrate, and explain with examples market failure in the context of the external costs of production (MSC > MC) of coal fired power station and the external cost of consumption (MSB < MB) of alcohol to the society.

(b) Many economists have argued that a form of 'congestion tax' ought to be imposed on the motorists who use their cars on busy roads, to take account of the external costs they impose on other road users and pedestrians. List and compare the advantages and disadvantages of the following three measures to reduce congestion in Australia:

(i) An increase in the rate of excise duty on petrol.

(ii) The use of bus and cycle lanes at peak times.

(iii) Using a system like Singapore (see box 7.2) where charges are deducted from a pre-paid smart card inserted into a device in the car, and charges vary according to the time of day and /or the level of congestion.

Question 3: Refer to Chapter 9- Introduction to Macroeconomics

(a) Explain in terms of the Australian circular flow of income if the following are net injections, net withdrawals or neither. If there is uncertainty, explain your assumptions.

(i) Firms spend money on research and development.

(ii) The public invests more money in credit unions.

(iii) The government runs a budget deficit and finances it by printing more money.

(iv) Australian investors earn higher dividends on overseas investments.

(b) Table 2 below gives the national accounts data for a hypothetical economy called Disney Island for a given year. Study the data from the table and calculate the following:

(i) Gross Domestic Product (GDP= C+I+G+NX) using the expenditure approach

(ii) Withdrawals (S+T+M)

(iii) Injections (I+G+X)

Table 2

National Accounts Data 2016

Amount ($) Billion

Gross Private Domestic Investment

35,000

Government Consumption Expenditure

15,000

Government Investment Expenditure

25,000

Household Private Consumption Expenditure

60,000

Income Taxes

15,000

Import

20,000

Exports

15,000

Savings

6000

Question 4: Refer to Chapter 10- The Determination of GDP

(a) Define, illustrate and distinguish between the following:

(i) Inflationary gap

(ii) Deflationary gap

(b) Illustrate and explain what effect the following will have on the expenditure line:

(i) An increase in the proportion of people's income that is saved.

(ii) A rise in Australian exports.

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The project on microeconomics high lites some important points to build a knowledge of The reader on areas of computation of various key points for the GDP of country.

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inf1616704

11/10/2017 4:14:50 AM

Thank you so much! Great work and I'm excited to get it graded! Really appreciate the patience too! Expert completed assignment by the deadline given and did a good job. Thank you!

len1616704

8/28/2017 6:14:52 AM

Australian student, total 1500-2000 words. Rest need it as per the guidelines, including diagrams, graphs or any calculation if required. Assessment criteria for Assessment Item 2: Use the DADA acronym when structuring your answers to all questions in economics. (Definitions: define the key terms; Assumptions: list or make assumptions as required; Diagrams: draw relevant graphs/tables and explain; and original Analysis: apply the theory to real life economic examples and explain).

len1616704

8/28/2017 6:14:44 AM

Tips for completing Assessment - Please read the assigned chapters and work on the assignment questions progressively each week. This approach will prevent you from asking for extensions and allow you to submit all assessment tasks on time to pass the course. Concepts and key terms must be defined accurately and completely. The assumptions upon which the analysis is based must be stated at the outset. Diagrams must be drawn properly, correctly labelled and the relations they depict explained on the diagram and in the accompanying text of your answer. When a question has more than one part, so too should the answer. Ensure complete coverage in the analysis section of your answer. Students should reference a minimum of two (2) to three (3) textbooks to answer these theory based questions. Remember, an extension is not a gift; it is a burden.

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