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Topic Review 2

This document contains a review of economics topics with multiple questions. It includes questions about [1] calculating total revenue, total cost, profit, and loss from graphs; [2] identifying market structures and their characteristics from graphs; and [3] short answer questions about market structures, pricing strategies, and profit maximization. The questions cover concepts like monopoly, oligopoly, and perfect competition.

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Afifah Abd Wahid
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24 views

Topic Review 2

This document contains a review of economics topics with multiple questions. It includes questions about [1] calculating total revenue, total cost, profit, and loss from graphs; [2] identifying market structures and their characteristics from graphs; and [3] short answer questions about market structures, pricing strategies, and profit maximization. The questions cover concepts like monopoly, oligopoly, and perfect competition.

Uploaded by

Afifah Abd Wahid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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GSFM7223

ECONOMICS FOR MANAGERS


TOPIC REVIEW 2

Question 1

Based on the given graph, calculate TR, TC, Profit/Loss and Shade the area of Profit/Loss.

a)

b)

1
c)

Question 2

The following questions are based on the given graph.

a) What market structure is this firm operating in?

2
b) State FIVE (5) characteristics of this market structure.

c) What is the profit-maximizing price and quantity?

d) Calculate the total revenue.

e) Calculate the total cost.

f) Determine the total profit or loss.

3
g) Shade the area of profit or loss in the above graph.

h) Based on your answer in (g). Should the firm shutdown their business or proceed their
business? Explain your answer.

Question 3

Figure 1

Based on the Figure 1.

a) What market structure is this firm operating in?

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b) What is the profit-maximizing price and quantity?

c) Calculate the total revenue and total cost.

d) Calculate the total profit or loss.

Question 4

Little Kona is a small coffee company that is considering entering a market dominated by
Big Brew. Each company’s profit depends on whether Little Kona enters and whether Big
Brew sets a high price or a low price:

Big Brew

High price Low price

Brew makes Brew makes


Enter RM3 million RM1 million

Kona makes Kona losses


Little RM2 million RM1 million
Kona
Brew makes Brew makes
Don’t
RM7 million RM2 million
Enter
Kona makes Kona makes
zero zero

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a) Does either player in this game have a dominant strategy?

b) Big Brew threatens Little Kona by saying, “If you enter, we’re going to set a low price,
so you had better stay out.” Do you think Little Kona should believe the threat? Why
or why not?

Question 5

Determine the market structure for the following cases and explain your reasoning:

a) The place where you live is like many other places, you and your friends have many
choices about where to go to get a haircut. The price you pay for a basic haircut
probably ranges from a few dollars at a discount establishment to many dollars at an
upscale salon.

Market structure:
Explanation:

b) The four largest breakfast cereal companies (Kellogg, General Mills, Post, and
Quaker) were producing over 86 percent of the total amount of breakfast cereals in the
United States. These cereal producers spend a lot on advertising and use advertising
as a way to compete with one another.

Market structure:
Explanation:

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c) Beginning in the 1930s and throughout most of the 20th century, the De Beers
company, based in Switzerland and South Africa, controlled most of the world’s
diamond supply. Control of the supply of diamonds enabled De Beers to restrict the
number of diamonds offered for sale and sell them at higher prices than would exist
under competition.

Market structure:
Explanation:

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***End of Topic Review Questions**

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