Question 1
(a)
In economics Market structure suggest to how various industries are categorized evolved
structured on the on the level and character of competition of services and goods.
(b)
Perfect competition – Mrs Williams Hair Salon belongs in the perfect competition structure.
Perfect competition is when there is a vast amount of small companies competing against one
another. They sell similar to identical products which in this case Mrs. Williams is providing hair
care service which is being performed among many individuals. In this industry customers are
fully aware of the products that are being purchased also the change of pricing and branding.
(c)
Indeed she will definitely be able to construct supernormal profits in the short-run; a company is
able to attain allotment regulation in the short-run. In this structure enlarged competition
decreases rate and asking price to the lowest of the long-run mean price. To conclude, cost
equals the slight price and the standard gross price for all good.
(d)
(e)
Mrs. Williams Hair salon would only make normal profits because there are no Barriers to entry,
companies would be advised to launch into the market until cost decreases down again to P1 and
regular profits are constructed.
Question 2
(a)
Quantity Supplied (000 lb.)
Price of
Tomato
$
30
40
50
60
70
I.
II.
Market
Demand
(000 lb.)
500
400
300
200
100
Farmer
Q
50
100
130
185
220
Farmer
R
25
60
100
125
180
Market Supply (000 lb.)
Farmer
Y
25
40
70
90
100
100
200
300
400
500
Equilibrium Price - $50
Equilibrium quantity - 300 Tomatoes
(b)



Expectations - in future prices- if a customer expects that the price of an item to decrease
in the future, they avoid purchasing it now, Reducing demand for that commodity now,
On the other hand, if a buyer believes that the cost will increase over time, the demand
for the product now increases. .
Taxes – The demand curve moves downward in this instance because people have less
spare cash to spend. As a result, a new equilibrium level of supply and demand is created,
which is lower in quantity and cheaper in price than the prior equilibrium level.
Improvement in technology – This will cause an ascending convey of the stock arch
because the cost of the products will decrease and the customers will demand more of the
product once the price has decreased.
(c)
Whenever the mean price is decreasing, the borderline price is lesser than the mean price and
while the mean price is arising, the borderline price is taller than the mean price. However if the
borderline price doesn’t go upwards or downwards, the mean and borderline will remain equal.
Question 3
(a)
Output
Level
Variable
Cost
Total Cost
$
0
1
2
3
4
0
56
90
108
116
128
184
218
236
244
Marginal
Cost
$
56
34
18
8
Average
Fixed Cost
$
128
64
42.67
32
Average
Total Cost
$
184
109
78.67
61
(b)
The mean price arch is normally U rounded Shaped. Borderline price is deliberated by proceeds
to interchange in sum price allying (2) quantities of production and splitting by the interchange
in production. Therefore the borderline price is uphill tilting. Mean variable price is split by total
out production.
(c)
The mean fluctuating price arch rest beneath the mean average price arch and is normally U
rounded shaped or uphill tilting. Border line price is typically deliberated by accepting the
interchange in mean price intertwined by two structures of production and split by the
interchange in production. The borderline price arch is uphill tilting.
References
Chand. S. (2015) . https://www.yourarticlelibrary.com/economics/market/market-structuremeaning-characteristics-and-forms-economics/28736
Hall. M (2020). https://www.investopedia.com/ask/answers/031815/why-are-there-no-profitsperfectly-competitive-market.asp
Black. O (2015) . https://courses.lumenlearning.com/boundless-economics/chapter/productioncost/