a) Assume a market at equilibrium shown by the intersection of S, and D, at a price of P, = $3 and at a market quantity of Q1 = 20,000. Assume also that there are 50 firs operating initially in this market. Assume that the diagram of the competitive firm above is representative of each individual firm in this market (each firm has a total fixed cost o1 $100 1 MR and AR are egual to 2 The quantity oroduced ov each firm is 3) Total revenue received by each firm is 4 Average total cost for each firm Is. 5) Total cost of production for each firm is 6) Average fixed cost for each firm is A Average vanable cost for each firm Is 8) Economic profit for each firm is b) Assume that there is now an increase in demand from Da to D and a new equilibrium occurs at Daand S, and a new equilibrium price of P2 = $5.00 and at a market quantity of Q2 = 24,000: lassume that AVe for each firm is now 33 00 1 MR and AR are egual to 2) The quantity produced by each firm IS 3) Total revenue received by each firm is 4 Average total cost for each firm IS 5) Total cost of production for each firm is 6) Average fixed cost for each firm is 7 Average vanable cost for each firm is 8) Economic profit for each firm is c) Assume that additional firms enter and there is now an increase in supply from Si to S2 and a new equilibrium occurs at Dz and S2 with a new market quantity of Q3 = 28,000: 1) MR and AR are equal to 2) The quantity produced by each firm is 3) Total revenue received by each firm is 4) Average total cost for each firm is. 5) Total cost of production for each firm is 6) Average fixed cost for each firm is 7) Average variable cost for each firm is 8) Economic profit for each firm is

Part 1 (6 marks in total - each question is worth 0.25 marks) Consider the diagrams below: Market Competitive firm Price $ Price, cost $ 51 MC ATC AVC P2 D2=AR2=MR --.- D,=AR,=MR Q1 Q2 Q3 91 92 Quantity quantity a) Assume a market at equilibrium shown by the intersection of S, and D, at a price of P, = $3 and at a market quantity of Q1 = 20,000. Assume also that there are 50 firms operating initially in this market. Assume that the diagram of the competitive firm above is representative of each individual firm in this market (each firm has a total fixed cost of $100) 1) MR and AR are equal to 2) The quantity produced by each firm is_ 3) Total revenue received by each firm is 4) Average total cost for each firm is 5) Total cost of production for each firm is 6) Average fixed cost for each firm is 7) Average variable cost for each firm is 8) Economic profit for each firm is b) Assume that there is now an increase in demand from D, to D2 and a new equilibrium occurs at D2 and S, and a new equilibrium price of P2 = $5.00 and at a market quantity of Q2 = 24,000: (assume that AVC for each firm is now $3.00) 1) MR and AR are equal to 2) The quantity produced by each firm is_ 3) Total revenue received by each firm is 4) Average total cost for each firm is 5) Total cost of production for each firm is_ 6) Average fixed cost for each firm is 7) Average variable cost for each firm is 8) Economic profit for each firm is c) Assume that additional firms enter and there is now an increase in supply from S, to S2 and a new equilibrium occurs at D2 and S2 with a new market quantity of Q3 = 28,000: 1) MR and AR are equal to 2) The quantity produced by each firm is 3) Total revenue received by each firm is 4) Average total cost for each firm is_ 5) Total cost of production for each firm is 6) Average fixed cost for each firm is 7) Average variable cost for each firm is 8) Economic profit for each firm isPart 1 (6 marks in total - each question is worth 0.25 marks) Consider the diagrams below: Market Competitive firm Price $ Price, cost $ MC ATC AVC "..= P2 D2=AR2=MRz .. P D,=AR,=MR Q1 Q2 Q3 Quantity 91 9: quantity a) Assume a market at equilibrium shown by the intersection of S, and D, at a price of P, = $3 and at a market quantity of Q1 = in this market. Assume that the diagram of the competitive firm above is representative of each individual firm in this market (each firm has a total fixed cost of $100) 1) MR and AR are equal to 2) The quantity produced by each firm is_ 3) Total revenue received by each firm is 4) Average total cost for each firm is 5) Total cost of production for each firm is_ 6) Average fixed cost for each firm is ) Average variable cost for each firm is_ ) Economic profit for each firm is some that there is now an increase in demand from D, to Dz and a new equilibrium occurs at D2 and S, and a new equilibrium price of P2 = $5.00 and at a market quantity of Q2 = 24,000: (assume that AVC for each firm is now $3.00 1) MR and AR are equal to 2) The quantity produced by each firm is_ 3) Total revenue received by each firm is_ 4) Average total cost for each firm is 5) Total cost of production for each firm is 6) Average fixed cost for each firm is_ ) Average variable cost for each firm is_ 8) Economic profit for each firm is_ c) Assume that additional firms enter and there is now an increase in supply from S, to S2 and a new equilibrium occurs at D2 and S2 with a new market quantity of Q3 = 28,000: 1) MR and AR are equal to 2) The quantity produced by each firm is_ 3) Total revenue received by each firm is 4) Average total cost for each firm is_ 5) Total cost of production for each firm is_ 6) Average fixed cost for each firm is 7) Average variable cost for each firm is 8) Economic profit for each firm is