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COVER PAGE

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ECO 20A
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ECO 20A

QUESTION 1
1.1 C
1.2 D
1.3 B
1.4 D
1.5 C
1.6 A
1.7 C
1.8 C
1.9 A
1.10 D

QUESTION 2

2.1 F
2.2 F
2.3 F
2.4 T
2.5 T

QUESTION 3

3.1

QD = QS

10-2P = 3P-5

10+5 = 2P + 3P

153/5 = 5P/5

53 = P

3.2 QD = 10 -2P

= 10 – 2 (3)

=4

QS = 3 (3) -3

=4
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Loss to consumer will be = 2(4-3) + (4-2)(4-3) / 2

=3

Consumer Loss = a+b

QUESTION 4

4.1

4:2 An individual demand curve focuses on the quantity of a product that a single consumer will buy
at a certain price, whereas market demand focuses on the quantity of a product that all consumers in
a market will buy at a certain price.

4.3 Movement in the demand curve happens due to the relative charges in price of a commodity
whereas a shift in the demand curve happens due to other factors apart from price; for example,
changes in consumer references. Movement in the demand curve is shown on one downward
slopping demand curve while a shift of the demand curve is shown by another demand curve to the
right or the left.

4.4

PRICE CHANGE Qs = 200 + 5P Qs=5P Qs = 200 + 5P

50-60 0.579 1 3.667

60 -70 0.619 1 0.52

70 – 80 0.652 1 2.143
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80-90 0.68 1 1.889

90-100 0.704 1 1.727

300-310 0.871 1 1.151

4.5.1 It is inelastic since it is less than zero.

4.5.2 The Higher

QUESTION 5

5.1.1 Total Fixed Cost =2000

5.1.3 Total Valuable Cost= Total Cost – Total Fixed Cost

= (2000 + 6Q+5𝑄2)-2000

= 6𝑄+5𝑄2

5.1.3 Average Total Cost =Total Cost / Quantity

= (2000+6𝑄 +5𝑄2) /Q

= 2000/Q+6+5Q

5.1.4 Average Total Cost =Total Cost / Quantity

=(2000=6𝑄 +5𝑄2)/𝑄

= 2000/𝑄 +6+5𝑄

5.1.5 Marginal Cost= dtc/Dq

=6 + 10Q

5.2 Marginal Cost = Average Cost

6+1QQ = 2000 / Q + 6 + 5Q

QUESTION 6

6.1 Third Degree

6.2 Business they must try resale.

= Firstly, must be able to operate in an imperfect market

=It must be able to demonstrate elasticities of demand

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6.3.1 Second Degree

6.3.2 It is done so as to maximize profits through targeting both the poor and rich consumers, for an
example ShopRite and Checkers it also makes the seller to capture consumer and generate more
revenue. It does lure customers would have not been interested the price was too high or too cheap.

6.4 The lowest prices will be those that make a firm to achieve or cater for Marginal Cost Profit
maximization happens when MR+MC to a point were Marginal Cost intersects demand curve.

The lowest price must be equals to marginal Cost of producing that Unit.

QUESTION 7

7.1.1. It is a market environment where there is a sole provider of s provider or service provider and
the monopoly telecom industry. There is little competition since they are few companies competing,
they are barriers to entry in the market that is why they are few companies operating.
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QUESTION 8

8.2

8.3 Monopolistic process are higher since they are the price in a competitive market are debentured
by demand supply. One to zero competition and close substitute monopolistic markets they have a
price advantage of putting them higher. Competitive markets are price takers, so prices are likely to
be fair.

QUESTION 9

9.2.1 It is a Theorem used in decision making within the game that stipulates a player can achieve the
deserved outcome by not depurating from their initial strategy. It is a situation in which a participant
will continue with chosen strategy having no incentive to peviate from it, after considering the
strategy of the opponent.

9.2.1 Yes, because both players have a dominant strategy of not advertising.

9.2.2 The nosh equilibrium is on advertising their services.

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REFERENCES

Pindyck, R.S. & Rubinfeld, D.L. 2018. Microeconomics. 9th ed. London: Pearson Education.

Mohr, P. & Associates.2015. Economics for South African students.5th ed. Pretoria: Van Schaik