ECS2601
ECS2601 ASSIGNMENT 2 SOLUTIONS
SEMESTER 2 2020
ECS2601
ASSIGNMENT 2
SOLUTIONS
SEMESTER 2 2020
, ECS2601 ASSIGNMENT 2 SOLUTIONS SEMESTER 2 2020
UNIQUE NUMBER: 881723
1. If current output is less than the profit-maximizing output, then the next unit produced will…
[1] Decrease profit.
[2] Increase cost more than it increases revenue.
[3] Increase revenue more than it increases cost.
[4] Increase revenue without increasing cost.
[5] Leave profit unchanged.
Explanation-(3)This means that MR>MC therefore the firm must increase the output which it produces,
therefore the next unit produced will increase revenue more than it increases cost, approaching the
profit maximizing qnty where MR=MC
2. In a perfectly competitive industry, the amount of output that a firm decides to sell has no
effect on the market price, because…
ECS2601 ASSIGNMENT 2 SOLUTIONS
SEMESTER 2 2020
ECS2601
ASSIGNMENT 2
SOLUTIONS
SEMESTER 2 2020
, ECS2601 ASSIGNMENT 2 SOLUTIONS SEMESTER 2 2020
UNIQUE NUMBER: 881723
1. If current output is less than the profit-maximizing output, then the next unit produced will…
[1] Decrease profit.
[2] Increase cost more than it increases revenue.
[3] Increase revenue more than it increases cost.
[4] Increase revenue without increasing cost.
[5] Leave profit unchanged.
Explanation-(3)This means that MR>MC therefore the firm must increase the output which it produces,
therefore the next unit produced will increase revenue more than it increases cost, approaching the
profit maximizing qnty where MR=MC
2. In a perfectly competitive industry, the amount of output that a firm decides to sell has no
effect on the market price, because…
