The following economics questions need a clear brief explanation and use of graphs where necessary.

1. (a) State and explain the assumptions underlying the theory of Imperfect Competition. (25 marks) (b) Draw the demand curve which faces a firm in imperfect competition and justify its shape. (10 marks) (c) Discuss, with the aid of a clearly labelled diagram, the implications of the assumptions in (a) above, on the equilibrium of the firm in the long run under conditions of imperfect competition. (30 marks) (d) State ONE FEATURE of this firm in long run equilibrium which would be common to a firm in long run equilibrium under EITHER perfect competition OR monopoly. (10 marks)2. (a) Define what is meant by price elasticity of demand. (10 marks) (b) A consumer buys 80 units of a good when the price is $1.50. The price increases to f1.75 and the Consumer now buys 70 units. (i) Using the formula below, calculate the consumer's price elasticity of demand. Show all your workings. AQ P1 + P2 AP X Q1 + Q2 (ii) Is demand for this good elastic, inelastic or unitary elastic? (iii) The seller of the above good wishes to earn maximum revenue. What changes, if any, should the seller make in the selling price of the good to earn maximum revenue? Explain your answer. (35 marks) (c) State and explain FOUR factors that affect price elasticity of demand. (30 marks)3. (a) State FOUR factors that affect the supply of a good, other than the price of the good itself, and explain how each factor affects supply. (25 marks) (b) State and explain the principal economic assumptions made about consumer behaviour. (25 marks) (c) The law of diminishing marginal utility states that as additional units of a good are consumed the marginal utility of this good will eventually decline. (i) State and explain the assumptions underlying the law of diminishing marginal utility. (ii) Give TWO examples of commodities which do not comply with this law. Justify each choice with a brief explanation