Which of the following will definitely cause an increase in the equilibrium price?

An increase in both demand and supply

A decrease in both demand and supply

An increase in demand combined with a decrease in supply

A decrease in demand combined with an increase in supply

Any of the above, depending on the circumstances

Which of the following will definitely result in a decrease in the equilibrium price of a good?

An increase in both demand and supply.

A decrease in both demand and supply.

An increase in demand together with a decrease in supply.

A decrease in demand together with an increase in supply.

A decrease in supply only.

Consider the market for South African biltong. Assuming everything else remains unchanged, the equilibrium price of biltong will decrease if

There is a shortage of biltong.

The price of beer, a complement, increases.

The supply of biltong decreases.

The price of peanuts, a substitute, increases.

There is an animal disease that affects the supply of biltong

Use the following data to answer the question:

What is the average cost of producing 4 units?

100

700

25

175

200

Use the following data to answer the question:

What is the marginal cost of the third unit?

100

300

50

700

850

Consider a firm that manufactures surfboards. Presently the firm is hiring 5 workers at a wage rate of R20/hour. The firm is able to produce 50 surfboards per hour. The firm decides to hire an additional worker. The marginal product of that worker is 30 surfboards per hour. What is the marginal cost of output associated with hiring the sixth worker?

R20

R1,50

R0,67

R2

R30

Which one of the following statements is correct? The demand for the product of a perfectly competitive firm:

slopes downward from left to right.

slopes upward from left to right.

is perfectly elastic.

is perfectly inelastic.

Is Unitary elastic

Which one of the following is NOT a requirement for or characteristic of perfect competition?

The good must be homogeneous (standardised).

All market participants should have perfect knowledge of market conditions.

Every firm must have the power to set its own price.

There must be a large number of sellers.

There should be no government intervention.

A small farmer is more likely to operate in a perfectly competitive market than a company like SABMiller because:

A small business is more likely to keep close control on costs than a large firm.

SABMiller employs many people, whereas perfectly competitive firms are owner managed.

The demand for beer is less elastic than the demand for food.

A small farmer supplies a small share of market supply.

Farming is more risky than beer production.

The following graph illustrates the cost and revenue conditions of a firm that operates in a perfectly competitive market. Which one of the following indicates the profit maximising output of the firm?

A

B

C

D

A & D

STRUCTURED QUESTIONS (COMPULSORY)

Question 2                                                                                                                       [10 marks]

Use a diagram to illustrate what will happen to the equilibrium price and quantity of a product if the demand for the product increases. Also mention three factors that can cause an increase in demand. (7)

Mention three factors that can cause a decrease in supply. (3)

Question 3

                                                                                                                                           [10 Marks]

The short-run cost schedule of Sandy’s Sushi Bar is presented in the table below:

Complete the six missing columns in the table.

Capital

Labour

TP

TFC

TVC

TC

AFC

AVC

AC

MC

1

0

0

250

0

250

-

-

-

-

1

1

04

250

550

800

1

2

10

250

850

1100

1

3

13

250

1150

1400

1

4

15

250

1450

1700

1

5

16

250

1750

2000

Question 4                                                                                                                          [10 Marks]

Explain the shape of the marginal revenue curve facing (a) a perfectly competitive firm and (b) a monopolistic firm. (10)

Question

Which of the following will definitely cause an increase in the equilibrium price?
An increase in both demand and supply
1. A decrease in both demand and supply
2. An increase in demand combined with a decrease in supply
3. A decrease in demand combined with an increase in supply
4. Any of the above, depending on the circumstances
Which of the following will definitely result in a decrease in the equilibrium price of a good?
An increase in both demand and supply.
A decrease in both demand and supply.
An increase in demand together with a decrease in supply.
A decrease in demand together with an increase in supply.
A decrease in supply only.
Consider the market for South African biltong. Assuming everything else remains unchanged, the equilibrium price of biltong will decrease if
There is a shortage of biltong.
The price of beer, a complement, increases.
The supply of biltong decreases.
The price of peanuts, a substitute, increases.
There is an animal disease that affects the supply of biltong

Use the following data to answer the question:

Use the following data to answer the question:

What is the marginal cost of the third unit?
1. 100
2. 300
3. 50
4. 700
5. 850
Consider a firm that manufactures surfboards. Presently the firm is hiring 5 workers at a wage rate of R20/hour. The firm is able to produce 50 surfboards per hour. The firm decides to hire an additional worker. The marginal product of that worker is 30 surfboards per hour. What is the marginal cost of output associated with hiring the sixth worker?
1. R20
2. R1,50
3. R0,67
4. R2
5. R30
Which one of the following statements is correct? The demand for the product of a perfectly competitive firm:
slopes downward from left to right.
slopes upward from left to right.
is perfectly elastic.
is perfectly inelastic.
Is Unitary elastic

Which one of the following is NOT a requirement for or characteristic of perfect competition?

A small farmer is more likely to operate in a perfectly competitive market than a company like SABMiller because:

A small business is more likely to keep close control on costs than a large firm.
SABMiller employs many people, whereas perfectly competitive firms are owner managed.
The demand for beer is less elastic than the demand for food.
A small farmer supplies a small share of market supply.
Farming is more risky than beer production.

The following graph illustrates the cost and revenue conditions of a firm that operates in a perfectly competitive market. Which one of the following indicates the profit maximising output of the firm?

STRUCTURED QUESTIONS (COMPULSORY)

Question 2 [10 marks]

Use a diagram to illustrate what will happen to the equilibrium price and quantity of a product if the demand for the product increases. Also mention three factors that can cause an increase in demand. (7)

Question 3

[10 Marks]

The short-run cost schedule of Sandy’s Sushi Bar is presented in the table below:

Complete the six missing columns in the table.

Question 4 [10 Marks]

Explain the shape of the marginal revenue curve facing (a) a perfectly competitive firm and (b) a monopolistic firm. (10)

Accepted Answer

The price of equilibrium has been the sole cost that customers' expectations and sellers'…