Started on Monday, 23 September 2024, 5:06 PM OSCAR THE TUTOR
State Finished oscardiura@gmail.com
Completed on Monday, 23 September 2024, 5:37 PM +27737560989
Time taken 31 mins 6 secs for FAC MAC ECS DSC TAX QMI FIN
Marks 9.50/11.00 INV BNU STA tutorialsOSCAR THE
Grade 86.36 out of 100.00 TUTOR
oscardiura@gmail.com
+27737560989
Question 1 I confirm for FAC MAC ECS DSC TAX QMI FIN
Complete that this assessment will be my own individual work; INV BNU STA tutorials
Not graded
that I will not communicate with anyone else in any way during the completion of this assessment;
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question that I will not cheat in any way in completing and submitting this assessment.
I confirm.
I do not confirm.
Question 2 A monopoly is a
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Mark 1.00 out small group of producers with similar products.
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single seller of a product that has no close substitutes.
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large number of producers each with a small share of the total market output.
single buyer of raw materials.
A monopoly is a market structure in which a single seller or producer controls the entire supply of a
product or service, and as a result, dominates the market and has significant pricing power.
Key characteristics of a monopoly include:
1. Single Seller: There is only one company or entity that provides the product or service in the
market.
2. No Close Substitutes: The product or service offered by the monopoly has no close substitutes.
Consumers do not have alternative options that are comparable in terms of quality, price, or
availability.
3. Price Maker: The monopoly has control over setting the price of the product or service.
4. Barriers to Entry: Monopolies often maintain their dominant position due to significant barriers
that prevent other firms from entering the market and competing. Barriers can include legal
restrictions, high startup costs, control over essential resources, or technological advantages.
Question 3 When a perfectly competitive industry is in a long-run equilibrium, all the firms in the industry will
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Mark 1.00 out earn an economic profit.
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earn a normal profit.
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make an economic loss.
earn zero profits.
, In the long run, firms in a perfectly competitive industry can only earn a normal profit.
Normal profits occur when total revenue equals total cost, including both explicit costs (such as
payments for resources) and implicit costs (including the opportunity cost of the owner's time and
capital). Normal profits are just enough to keep owners in the industry but not excessive to attract new
firms into the market.
If for example, firms are making an economic profit, this will prompt other firms to enter the industry.
When this happens, the supply of the product increases, causing prices to fall. Thus firms go from
earning an economic profit to earning a normal profit. The opposite is true in the case where firms are
initially making an economic loss.
Question 4 This question is based on the following diagram which shows the marginal cost and average total cost
Complete curves for a perfectly competitive firm.
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If the market price is R10
the firm earns R10 profit on each unit sold
marginal revenue equals R10
the firm is losing money in the short run
the firm earns R8 profit on each unit sold
If the market price is R10 marginal revenue equals R10. If the price at which a firm can sell its product is
given (remember firms are price takers), then the marginal revenue (the additional revenue the firm
obtains by selling an additional unit) is equal to the price that the firm can obtain for that additional unit.
Question 5 This question is based on the following diagram which shows cost curves for Benny’s Bookworms, a
Complete perfectly competitive firm.
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question
, At which point would Benny’s Bookworms close down?
B
A
C
D
Benny’s Bookworms is making a normal profit at point D (P = MC and minimum of AC), at point C, an
economic loss is made (P = MC, but below the minimum of AC). In reaching point B Benny’s Bookworms
is in serious trouble, it will close down as it cannot cover its variable costs anymore.
Question 6 Look at the figure below and then indicate whether the statement is True (T) or False (F):
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At a price of R50 and Q4 the firm makes an economic profit.
Note, that you will lose 50% of the mark for this question if you choose the incorrect option.
If you are not sure about the answer and do not want to guess, choose the “Unsure” option. You will
neither receive marks for the question nor will you lose marks for choosing this option.
True
False
Unsure
, The rising portion of the firm’s marginal cost curve above the minimum of its average variable cost curve
at point d is the firm’s supply curve.
P = 10
The firm will not produce at all as it does not even covers the fixed costs.
P = 20
The firm will be at its close-down point (d) and it is immaterial if it shuts down or continues production.
P = 30
The firm will minimise its economic losses by producing at point c.
P = 40
The firm will make a normal profit (ie it will break even) at point b
P = 50
The firm will maximise economic profit at point e.
Question 7 Monopolistic competition is a market structure with many sellers selling a homogeneous product.
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If you are not sure about the answer and do not want to guess, choose the “Unsure” option. You will
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question neither receive marks for the question nor will you lose marks for choosing this option.
True
False
Unsure
The statement is false.
Monopolistic competition is a market structure characterised by many, though less than perfect
competition, sellers, but they sell differentiated products. In monopolistic competition, each firm offers a
slightly different product or service that is unique in some way, whether through branding, quality,
features, or other distinguishing factors. This product differentiation allows firms to have some degree
of market power and control over the price they charge.
Question 8 Under perfect competition each firm can decide how much to supply at the existing market price.
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If you are not sure about the answer and do not want to guess, choose the “Unsure” option. You will
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question neither receive marks for the question nor will you lose marks for choosing this option.
True
False
Unsure
The statement is true.
Under perfect competition, each individual firm is a price taker and cannot independently determine the
market price. Instead, each firm takes the market price as given and adjusts its level of output
accordingly. The firm's decision regarding how much to supply is based on profit maximisation, which
