2024 – S1 - ECS2601 – ASSESSMENT 5 – Q&A
Assessment 5
Started on Tuesday, 14 May 2024,
State Finished
Completed on Tuesday, 14 May 2024,
Time taken
Marks 40.00/40.00
Grade 100.00 out of 100.00
Question 1
If a firm is producing where its short-run marginal cost (SMC) = price and the long-
run marginal cost (LMC) is less than long-run average cost (LAC), then it would do
better in the long run by …
a.
increasing output with its existing plant until LMC equals price.
b.
increasing plant size until LMC and SMC are identical and equal to price.
c.
doing nothing because it is already at the long-run profit maximising point.
d.
decreasing plant size until LAC, short-run average cost (SAC) and price are equal.
Question 2
In the Stackelberg model, the firm that sets output first has an advantage.
Select one:
True
False
Question 3
A firm faces the following average revenue (demand) curve:
P = 120 – 0.02Q
1
, 2024 – S1 - ECS2601 – ASSESSMENT 5 – Q&A
where Q is weekly production and P is price, measured in cents per unit. The firm’s
cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits.
What is the level of production?
a.
1500
b.
3000
c.
750
d.
6000
Question 4
For a monopolist the market price is affected by their choice of quantity.
Select one:
True
False
Question 5
Use the following graph to answer the question.
2
Assessment 5
Started on Tuesday, 14 May 2024,
State Finished
Completed on Tuesday, 14 May 2024,
Time taken
Marks 40.00/40.00
Grade 100.00 out of 100.00
Question 1
If a firm is producing where its short-run marginal cost (SMC) = price and the long-
run marginal cost (LMC) is less than long-run average cost (LAC), then it would do
better in the long run by …
a.
increasing output with its existing plant until LMC equals price.
b.
increasing plant size until LMC and SMC are identical and equal to price.
c.
doing nothing because it is already at the long-run profit maximising point.
d.
decreasing plant size until LAC, short-run average cost (SAC) and price are equal.
Question 2
In the Stackelberg model, the firm that sets output first has an advantage.
Select one:
True
False
Question 3
A firm faces the following average revenue (demand) curve:
P = 120 – 0.02Q
1
, 2024 – S1 - ECS2601 – ASSESSMENT 5 – Q&A
where Q is weekly production and P is price, measured in cents per unit. The firm’s
cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits.
What is the level of production?
a.
1500
b.
3000
c.
750
d.
6000
Question 4
For a monopolist the market price is affected by their choice of quantity.
Select one:
True
False
Question 5
Use the following graph to answer the question.
2
