ECS1601 ASSIGNMENT 2 SOLUTIONS SEMESTER 2 2020

ECS1601

ECS1601 ASSIGNMENT 2 SOLUTIONS SEMESTER 2
2020




ECS1601
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…