Question 2

During winter, we can see small sellers selling pitha (rice cakes) all over Dhaka.

a) Is this market perfectly competitive? Explain the logic (reason) behind your answer. (3 marks)

b) Are the sellers in this market price takers or searchers? Explain the (reason) behind your answer.

(3 marks)

c) According to your observation is this market experiencing zero economic profit? Why or why not?

Discuss briefly. (2 marks)

d) According to your observation is this market experiencing resource allocative efficient? Why or why

not. Discuss briefly. (2 marks)

e) Discuss the concept of production using the given situation (a small pitha shop). (2 marks)

f) Discuss the concept of marginal cost and average total cost using the given situation (a small pitha

shop). (2 marks)

g) Does the law of diminishing marginal returns apply to a small pitha shop? Why or why not? Explain

briefly. (2 marks)

h) Do you think a small pitha shop is productive efficient? Why or why not? Explain briefly. (2 marks)