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Typology: Schemes and Mind Maps
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Answer all questions QUESTION 1 a) Define Cross Elasticity of Demand. Derive the Cross Elasticity of Demand from its definition. (no differentiation techniques required). (5 marks) b) What sign would you expect for the cross elasticity of a substitute? Why? (5 marks) Total: 10 marks QUESTION 2 a) Suppose the demand function is given by p=100- 2 q and the supply function is given by p= 50 + 3 q where p is price and q is quantity. Compute the market equilibrium p and q. (5 marks)
Using a diagram, show the case of a perfectly competitive firm. Total: 5 marks QUESTION 5 a) Discuss the shape of the short-run average cost and marginal cost curves. (5 marks) b) Explain why the marginal cost curve intersects the average cost curve at the minimum of average cost. (5 marks)
Total: 10 marks QUESTION 6 Number Of Workers Output 0 0 1 50 2 110 3 300 4 450 5 590 6 665 7 700 8 725 9 710 10 705 The table above shows the weekly relationship between output and number of workers for a factory with a fixed size of plant. Calculate the marginal product of labor and the average product of labor. Total: 5 marks --END OF PAPER--
