BBM102/05 MICROECONOMICS July 2019

Semester 1

Tutor-marked
Assignment 2
(TMA 2 – 25%)

Submission Date:
25 October 2019
Tutor-marked Assignment 2

Instructions:

1. TMA 2 covers the topics in Units 3 and 4.

2. TMA 2 contains:
FOUR questions

Answer all questions.

3. The total marks for TMA 2 is 100 which is equivalent to 25% of your final
total marks.

4. All students must submit the T-DF TMA Declaration Form as the front
cover when you submit your TMA.

5. The deadline for the submission of TMA 1 is on 25 October 2019 before

12.00 midnight.

2
Question 1

The table below shows the cost and revenue information of a firm.

Total Marginal Marginal

Output Price Total Cost
revenue Cost Revenue
(units) (RM)
(RM) (RM) (RM) (RM)
0 18 10
1 18 26
2 18 41
3 18 57
4 18 75
5 18 95
6 18 117

(a) Complete the table above.

[9 marks]

(b) Determine the price and output at equilibrium.

[6 marks]

(c) Calculate the profit or loss at equilibrium.

[4 marks]

(d) Is this firm in the short-run or long-run? Explain your answer.

[5 marks]

(e) To what type of market structure does this firm belong? Why do you say
so?
[6 marks]

3
Question 2

Answer the questions based on the table below.

Total Average Marginal Marginal

Quantity Total Cost
revenue Revenue Revenue Cost
(unit) (RM)
(RM) (RM) (RM) (RM)
10 100 50
20 180 110
30 240 160
40 280 200
50 300 230
60 300 250

(a) Complete the table above.

[9 marks]

(b) Based on the table above, determine the market structure this firm belongs
to. Provide your reasons.
[3 marks]

(c) Determine the equilibrium output and price.

[4 marks]

(d) Calculate the profit or loss at equilibrium.

[4 marks]

Question 3

Using appropriate diagram(s), explain why perfectly competitive firms only

receive normal profit in the long-run.
[20 marks]

Question 4

(a) Explain FOUR (3) main characteristics of a monopolistic firm.

[16 marks]

(b) Using an appropriate diagram, explain the difference between marginal

revenue and average revenue for a monopolistic firm.
[14 marks]

END OF TMA 2