Task: Summative Assignment
There is one summative assignment, and it is divided into two parts. You are asked to answer all the questions in the proposed cases.
This is an individual task. All students must submit their own file in the Moodle submission point.
QUESTION 1: How will the following changes affect the market price of wheat flour (assuming that the market is initially in equilibrium)? In each case, write your answer and sketch what happens to the demand and/or supply curves and, as result, what happens to the equilibrium price.
QUESTION 2: Given the following supply schedule
Draw the supply curve and calculate price elasticity of supply between P=2 and P =4; and also between P = 8 and P = 10
QUESTION 3: Let us assume that a company faces a market price of £3 per unit for its product.
a) What is its total revenue from selling 5 units? and 8 units?
b) What shape is its total revenue curve?
c) What will be its marginal revenue from selling the fifth unit? and the eighth unit?
d) What shape is its marginal revenue curve?
QUESTION 4: Define with your own words what “economies of scale” are, and give an example
QUESTION 5: What’s the difference between Profit, Normal Profit and Supernormal Profit?
• Wordcount: 1,500 words in total
• Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
• Font: Arial 12 pts.
• Text alignment: Justified.
• The in-text References and the Bibliography have to be in Harvard’s citation style.