## Microeconomics / Demand Concept and supply

Microeconomics / Demand Concept and supply

Consider the demand function for good x:

= A + B.+ C.+D.I

is the quantity demanded of good x, is the price of good x, is the price of a related good y, and I represents income.

(1pt for correct answer & 1pt for justification for each)

⦁ What is the range of values of B if good x:
⦁ has Elastic demand?
⦁ has Inelastic demand?
⦁ has Unit elastic demand?
⦁ has Perfectly elastic demand?
⦁ has Perfectly inelastic demand?
⦁ Is a Veblen good?
⦁ Is a Giffen good?
⦁ What is the sign (positive or negative) of C if good x and y are:
⦁ Substitutes?
⦁ Complements?
⦁ What is the sign (positive or negative) of D if good x is a/an:
⦁ Normal good?
⦁ Inferior good?
⦁ Giffen good?
⦁ Veblen good?

⦁ Describe what is Marginal Product and how it changes over the above production function across stages A, B, and C. (1pt for description and 2pts for each stage)
⦁ Within which part of the production function is the fund most likely to operate? (1pt for correct answer and 2 pts for justification)

What happens to the following curves if there is an increase in productivity?

⦁ Average product curve
⦁ Marginal product curve
⦁ Average cost curve
⦁ Marginal cost curve

Assuming the firm is operating under conditions of perfect competition:
⦁ Why is 400 not the short run output? (2pts)
⦁ What is the short run output? (1pt for correct answer, 1pt for justification)
⦁ What is the long run output? (1pt for correct answer, 2pts for justification)

Using the table above and the information provided in reading 15 with special focus on LOS 15.h, identify an example of a company which can be classified as trading under conditions of:

⦁ Perfect Competition
⦁ Monopolistic Competition
⦁ Oligopoly
⦁ Monopoly

The company need not necessarily be a listed but must be well known. Justify your choices using the 5 components of the above table.