Please explain in details
3. (a) (i) State the Law of Diminishing Marginal Returns. (ii) Using the table below, state after which level of employment diminishing marginal returns set in. Explain your answer. Number of persons employed 2 5 Total Output in units) 14 30 50 64 76 Marginal Output (in units) 14 (15 marks) (b) The short-run average cost curve of a firm initially slopes downwards and afterwards slopes upwards. Explain why this is the pattern of short-run average costs. (15 marks) (c) It is generally agreed that the long-run average cost curve initially slopes downwards due to economies of scale and then slopes upwards due to diseconomies of scale. These economies and diseconomies can be both internal and external. (i) Define the underlined terms. (ii) Distinguish between internal and external economies of scale, giving TWO examples in each case. (30 marks) (d) While there can be advantages from producing on a large scale, the majority of firms in Ireland are small. Explain THREE reasons why small firms survive in the Irish economy. (15 marks) [75 marks] 4. (a) In relation to the factor of production Enterprise: (i) Distinguish between insurable risks and non-insurable risks and state TWO examples in each case. (ii) Explain TWO reasons why 'enterprise' is considered to be a unique factor of production. (25 marks) (b) (i) Explain what is meant by the term Marginal Efficiency of Capital (MEC). (ii) Discuss FOUR factors, other than MEC, which influence the level of investment by entrepreneurs. (30 marks) (c) Discuss the role of profits in promoting development in a modern market economy. (20 marks) [75 marks]1. (a) Explain, with the aid of a diagram, the long run equilibrium position of a monopoly firm. (25 marks) (b) If firms wish to enter a monopoly market they will face barriers to entry. Explain THREE of these barriers. (15 marks) (c) If a monopoly firm wishes to engage in price discrimination, certain conditions must apply. State and explain THREE of these conditions. (15 marks) (d) Irish semi-state transport companies are facing increasing competition. Discuss ONE possible advantage and ONE possible disadvantage of this development for: Consumers; AND " Employees of semi-state transport companies. (20 marks) [75 marks] 2. (a) Define the following types or degrees of price elasticity of demand: (1) Perfectly elastic demand; (ii) Perfectly inelastic demand; (iii) Elastic demand; (iv) Unitary elastic demand. (20 marks) (b) State and explain FIVE factors that affect price elasticity of demand. (25 marks) (c) A consumer spends (120 per month on a product when its unit price is 80c, and continues to spend (120 per month on this product when its unit price increases to El. (i) Using the formula below, calculate the consumer's price elasticity of demand. Show all your workings. x Pi + P AP Q1 + Q (ii) Is demand for this product elastic, inelastic or unitary elastic? (iii) Should the seller make any changes in the selling price of this commodity to increase overall revenue? Explain your answer. (30 marks) [75 marks]
