2024 – S1 – ECS2601 – ASSESSMENT 6 – Q&A
Assessment 6
Started on Wednesday, 22 May 2024,
State Finished
Completed on Wednesday, 22 May 2024,
Time taken
Marks 60.00/60.00
Grade 100.00 out of 100.00
Question 1
Why don't some firms in monopolistic competition earn losses in the long run?
a.
Free entry allows enough firms to remain in the market and maintain the critical
mass of firms required to attract customers.
b.
The firms have enough monopoly power to ensure they always earn profits.
c.
In the long run, firms will build enough brand loyalty among customers to ensure a
profitable level of sales.
d.
Free exit implies that any unprofitable firms leave the market in the long run.
Feedback
The correct answer is:
Free exit implies that any unprofitable firms leave the market in the long run.
Question 2
Use the following table to answer the question.
1
, 2024 – S1 – ECS2601 – ASSESSMENT 6 – Q&A
That the firm is perfectly competitive is evident from its …
a.
constant marginal revenue.
b.
zero economic profit.
c.
increasing total cost.
d.
increasing marginal cost.
Feedback
Total Revenue equals Price multiplied by Quantity. Marginal revenue is the change
in TR resulting from producing one additional unit of output. In a perfectly competitive
environment, firms can effect no change on prices since they are price takers,
Therefore,
MR = change in TR/ Change in Q = (Constant P x Change in Q)/ Change in Q =
Constant P
Hence, MR = P, Marginal revenue will equal constant Price at every level of output
Q.
The correct answer is:
constant marginal revenue.
2
Assessment 6
Started on Wednesday, 22 May 2024,
State Finished
Completed on Wednesday, 22 May 2024,
Time taken
Marks 60.00/60.00
Grade 100.00 out of 100.00
Question 1
Why don't some firms in monopolistic competition earn losses in the long run?
a.
Free entry allows enough firms to remain in the market and maintain the critical
mass of firms required to attract customers.
b.
The firms have enough monopoly power to ensure they always earn profits.
c.
In the long run, firms will build enough brand loyalty among customers to ensure a
profitable level of sales.
d.
Free exit implies that any unprofitable firms leave the market in the long run.
Feedback
The correct answer is:
Free exit implies that any unprofitable firms leave the market in the long run.
Question 2
Use the following table to answer the question.
1
, 2024 – S1 – ECS2601 – ASSESSMENT 6 – Q&A
That the firm is perfectly competitive is evident from its …
a.
constant marginal revenue.
b.
zero economic profit.
c.
increasing total cost.
d.
increasing marginal cost.
Feedback
Total Revenue equals Price multiplied by Quantity. Marginal revenue is the change
in TR resulting from producing one additional unit of output. In a perfectly competitive
environment, firms can effect no change on prices since they are price takers,
Therefore,
MR = change in TR/ Change in Q = (Constant P x Change in Q)/ Change in Q =
Constant P
Hence, MR = P, Marginal revenue will equal constant Price at every level of output
Q.
The correct answer is:
constant marginal revenue.
2
