Question 1
a. Explain the concept of Equilibrium Price in a perfectly Competitive Market and how it is determined? [2 Marks]
b. Calculate the percentage change in equilibrium price if percentage change in quantity demanded is 25%. Price Elasticity of Demand is 1.35 and Price Elasticity of Supply is 1.15. [1 Mark]
Question 2
Calculate the Total Variable Cost, Average Fixed Cost, Average Variable Cost, Average total Cost and Marginal Cost in the table given below (All Cost are given in USD). [2 Marks]
Labor (No of workers)
Output (Number of units)
Total Fixed Cost
Total Variable Cost
Total Cost
Average Fixed Cost
Average Variable Cost
Average total Cost
MC
0
0
150
Sample Solution