Question 2 The sneakers market is perfectly competitive in Country Y. Table 1 shows the demand and supply schedule of the sneakers market in Country Y. Quantity Demanded (Pairs of sneakers) 300,000 260,000 200,000 150,000 110,000 50,000 (a) Price ($) 160 200 240 320 360 400 Table 1 - Demand and supply schedule of the sneakers market in Country Y Sporty Shoes is one of the firms in the sneakers market in Country Y. Apart from the rent of $10,000, Sporty Shoes has the cost structure as shown in Table 2. Quantity (Pairs of sneakers) Quantity Supplied (Pairs of sneakers) 120,000 160,000 200,000 300,000 380,000 450,000 Quantity (Pairs) Total Variable Cost ($) 0 0 50 6,850 100. 12,800 150 19,000 200 31,000 250 49,000 Table 2- Total variable cost of Sporty Shoes Construct ONE new table for Sporty Shoes based on the above data. Besides including the original column of quantity, add columns of total cost, average total cost, and marginal cost of Sporty Shoes. Round your answers to integer, if applicable. No working is required. Total Cost ($) Average Total Cost ($) Marginal Cost ($) (Remarks: Significant mark deduction applies if the table is broken into 2 parts/2 tables or if abbreviation is used for the headings.) (3 marks) (b) Determine the price, profit maximizing output and economic profit (loss) of Sporty Shoes. Explain briefly. (5 marks) Page 3 of 4 (a) (b) (c) Quantity (Pairs of sneakers) Total Variable Cost ($) 0 0 50 6,850 100 12,800 150 19,000 200 31,000 250 49,000 Table 2 - Total variable cost of Sporty Shoes Construct ONE new table for Sporty Shoes based on the above data. Besides including the original column of quantity, add columns of total cost, average total cost, and marginal cost of Sporty Shoes. Round your answers to integer, if applicable. No working is required. Quantity (Pairs) Total Cost ($) Average Total Cost ($) Marginal Cost ($) (Remarks: Significant mark deduction applies if the table is broken into 2 parts / 2 tables or if abbreviation is used for the headings.) (3 marks) Determine the price, profit maximizing output and economic profit (loss) of Sporty Shoes. Explain briefly. (5 marks) Page 3 of 4 Based on the given data and your answer of part (a) and (b), draw a set of market-firm diagram to illustrate the situation of market for sneakers and Sporty Shoes. Label the critical points with figures. Label the area of profit (loss) too. No average variable cost curve and no explanation is required. (6 marks) (d) Recently the general income of citizens dropped by 10% compared to last year. At the same time, the landlord of Sporty Shoes raised the rent dramatically. Consequently, Sporty Shoes has recorded a zero economic profit. (i) Illustrate these changes in the same diagram of part (c). (3 marks) (ii) Use demand-and-supply analysis to explain the effects on the equilibrium price and equilibrium quantity of the sneakers market. How Sporty Shoes is affected by the change of equilibrium price? Explain. (5 marks)