Module Name: Economics
INSTRUCTIONS TO STUDENTS- READ PROPERLY THE MODE OF SUBMISSION
Your assignment will be marked on a total of 75 marks.
Answer questions below
Submission date: 13 Oct 2018. Assignments should reach OU by the due date.
Please note that any assignment submitted after the deadline, marks will be deducted as per assignment submission procedure document.
Word limit: NA
Format: Please follow the guidelines in the document “Guide to writing assignments” available on Moodle.
You are required to conform to Harvard referencing style.
Plagiarism will be heavily penalised and may result to non-award of marks. Group work is not allowed.
Please include a bibliography at the end of your document.
POINTS TO REMEMBER WHEN SUBMITTING YOUR ASSIGNMENT:
Assignments questions: Answer ALL questions
Please answer all questions concisely. Each answer should include a justification. Maximum score 75.
1. (26pts total)
Consider the demand function for good x:
Qx = A + B. Px + C. Py +D.I
Qx is the quantity demanded of good x, Px is the price of good x, Py is the price of a related good y, and I represents income.
(1pt for correct answer & 1pt for justification for each)
a. What is the range of values of B if good x:
i. has Elastic demand?
ii. has Inelastic demand?
iii. has Unit elastic demand?
iv. has Perfectly elastic demand?
v. has Perfectly inelastic demand?
vi. Is a Veblen good?
vii. Is a Giffen good?
b. What is the sign (positive or negative) of C if good x and y are:
c. What is the sign (positive or negative) of D if good x is a/an:
i. Normal good?
ii. Inferior good?
iii. Giffen good?
iv. Veblen good?
2. (10pts total)
a. Describe what is Marginal Product and how it changes over the above production function across stages A, B, and C. (1pt for description and 2pts for each stage)
b. Within which part of the production function is the fund most likely to operate? (1pt for correct answer and 2 pts for justification)
3. (9pts total)
What happens to the following curves if there is an increase in productivity?
a. Average product curve
b. Marginal product curve
c. Average cost curve
d. Marginal cost curve
4. (6pts total)
Assuming the firm is operating under conditions of perfect competition:
a. Why is 400 not the short run output? (2pts)
b. What is the short run output? (1pt for correct answer, 1pt for justification)
c. What is the long run output? (1pt for correct answer, 2pts for justification)
5. (24pts total)
Using the table above and the information provided in reading 15 with special focus on LOS 15.h, identify an example of a company which can be classified as trading under conditions of:
a. Perfect Competition
b. Monopolistic Competition
The company need not necessarily be a listed but must be well known. Justify your choices using the 5 components of the above table. (1pt for correct identification, 5pts for justification)