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ECS2601 ASS 2 SEMESTER 2 2020
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ECS2601 ASS 2 SEMESTER 2 2020 ECS2601 ASS 2 SEMESTER 2 2020 ECS2601 ASSIGNMENT 2 SECOND SEMESTER 2020 2 ECS2601 ASS 2 Second semester 2020 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 ...

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  • September 23, 2021
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  • 2021/2022
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GREATMINDS TUTORIALS RANDBURG JOHANNESBURG




ECS2601 ASSIGNMENT 2
SECOND SEMESTER 2020




Timothymatthews058@gmail.com
CONTACT 0790404390 FOR ASSISTANCE AND SUGGESTIONS.

, ECS2601 ASS 2 Second semester 2020



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…


[1] the market price is determined through regulation, by the government.
[2] the firm supplies a different good than its rivals.
[3] the firm’s output is a small fraction of the entire industry’s output.
[4] the short-run market price is determined solely by the firm’s technology.
[5] the demand curve for the industry’s output is downward sloping.


Explanation-(3) Because of one of the special characteristic of perfect completion: characterized by many
sellers –this implies that the impact of one firm in terms influencing the industries is insignificant


Answer question 3 using the following diagram, where a perfectly competitive firm faces a price of R40.


‘




2

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