1. (a)

No of Units Consumed 1 2 3 4 5

Total Utility in Units/Utils 20 45 60 70 75

Marginal Utility in Units/Utils 20 25 15 10 5

(i) State and explain the law illustrated in the above table.

(ii) Outline two assumptions underlying this law. (25)

(b) (i) State the 'Law of Supply', and illustrate with a labelled diagram.

(ii) Explain how technical progress affects the supply curve.

(iii) Outline, with the aid of labelled diagrams, two other factors that would cause a shift in the

supply curve. (30)

(c) Macklemore announces a concert in Ireland at a venue with a maximum capacity of 80,000 people.

The tickets are priced at 65 and the concert sells out in hours.

(i) Draw one labelled diagram, showing a market demand curve and a market supply curve that

would be consistent with the above information. Explain your answer.

(ii) Explain, using the concept of Consumer Surplus, why it might make sense for the concert

promoters to have different ticket prices (e.g. VIP section, seating section and standing

section) for this concert.

2. (a) (i) State and explain three assumptions underlying the theory of imperfect competition.

(ii) Explain why a firm's demand curve under imperfect competition differs from a firm's

demand curve under perfect competition.

(b) (i) Explain, with the aid of a diagram, the long run equilibrium of a firm in imperfect

competition.

(ii) With reference to your diagram in (b) (i) explain why the firm is not making socially

efficient use of scarce resources.

(30)

(c) "A few large retailers (e.g. Tesco, SuperValu, Dunnes Stores, Aldi, Lidl) dominate the Irish

grocery market at present."

Suggest a market structure which most closely reflects this situation. Explain your answer.

3. (a) (i) Define the categories of Price Elasticity of Demand (PED): elastic, inelastic and unit elastic.

(ii) State three factors that affect PED and explain how each factor affects it.

(b) A consumer/motorist buys 20 litres of petrol when the price is 1.60 per litre. When the price

increases to 1.70, as a result of an increase in carbon tax, the consumer buys 19 litres.

Calculate the consumer's Price Elasticity of Demand (PED). (Show all your workings.)

Is this demand for petrol price elastic or price inelastic? Outline the implication of your answer

for government revenue.

(c) A firm is considering a change to its product's price. It conducts market research which reveals

that the Price Elasticity of Demand (PED) for the product is -2.5.

Use this information to answer the following question:

(i) If the firm wishes to maximise total sales revenue, should it lower or raise the price of the

product? Explain your answer.

The market research also reveals Income Elasticity of Demand (YED) for the product is +4.5.

Use this information to answer the following question:

(ii) In the case of an economy which is expected to remain in recession for the next five years,

what, if any, will be the likely impact on the demand for the product? Explain your answer