Read more about the following concepts

1. Explain the relationship between costs in the short run and costs in the
long run. In your answer define what the “short run” means.
2. List two factors that affect how price-elastic demand for a particular good
is at a moment in time and explain
3. Define what is a long-run equilibrium in a perfectly competitive,
endowment economy
4. Discuss the relationship between short run production and cost functions
(theoretically, mathematically and graphically)?
5. Elucidate the difference between the Cournot duopoly model and the
Bertrand Duopoly model?
6. Discuss the main features of monopolistic competition?
7. Discuss demand and its determinants?

Calculation exercise
1. Suppose Dire Dawa University negotiated with a contractor two build one
building for an electronic library. However, the contractor wants to maximize profit
from that building. The contractor uses both labor and capital, and the efficient
combinations of Labor and capital that are sufficient to make one building is given by
the function 0.25 L1/2K1/2 . If the prices of labor (w) and capital (r) are $ 5 and
$ 10 respectively.
A. Find the least cost combination of L and K, and the minimum cost?

2.  Suppose that the firm operates in a perfectly competitive market. The market price of
his product is $4. The firm estimates its cost of production with the following cost
function:

TC=50+20q-5q2+0.33q3

a. What level of output should the firm produce to maximize its profit?
 b. Determine the level of profit at equilibrium.

c. What minimum price is required by the firm to stay in the market?

3. Cournot duopolists face a market demand curve given by P = 90 - Q, where Q is total

market demand in units. Each firm can produce output at a constant marginal cost of
$30/unit. a. What is the equilibrium price and quantity produced by each firm?