Question 1

(a) Explain any THREE (3) characteristics of a firm in a perfectly competitive industry. (6 marks)

(b) Discuss any FOUR (4) barriers to entry imposed by a monopolist. (8 marks)

(c) Distinguish between Positive Externalities and Negative Externalities. Provide ONE (1) example for each. (6 marks)

Question 2

Below is the cost information for a firm operating in a perfect competition market:

Quantity Total Cost ($) Average Total Cost ($) Marginal Cost ($)

0 15

1 30

2 40

3 49

4 57

5 66

6 77

7 92

(Note: leave all answers in TWO (2) decimal point)

(a) What is the value of fixed cost? (1 mark)

(b) Calculate the Average Total Cost and Marginal Cost. (4 marks)

(c) Define the following terms. Provide formula for each.

(i) Average Cost

(ii) Marginal Cost (6 marks)

(d) At a fixed price of RM 15 per unit, how many units should the producer sell to maximize profit. Show the workings. (6 marks)

(e) With illustration of a diagram briefly explain the relationship between Average Total Cost [ATC] and Marginal Cost [MC]. (3 marks)