Theory of Production-Equilibrium of the Firm and Industry [IEcoS (Economic Services) Economics Paper-1]: Questions 1 - 5 of 5

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Question 1

Appeared in Year: 2011

Describe in Detail Subjective▾

If and are the demand and supply functions respectively, calculate the equilibrium price and the quantity. Hence calculate both consumers and producer՚s surplus under equilibrium.

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Explanation

  • The equilibrium is established at the point where demand is equal to supply. Thus, equating the demand and supply equations given, we get:

… (108 more equations, 27 figures) …

Question 2

Appeared in Year: 2013

Describe in Detail Subjective▾

Why does a perfectly competitive firm keep on producing in the short run when it is incurring losses?

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Explanation

  • Explain also when the firm will shut down. Use suitable diagram.
  • In a perfectly competitive market, a firm is a price taker, that is, it can sell any amount of output at the prevailing market price. The equilibrium conditions are that MC = MR = Price and slope of MC should be greater than slope of MR. But the level of profits depends on the Average …

… (71 more words, 4 figures) …

Question 3

Write in Short Short Answer▾

Explain the meaning of Nash Equilibrium, is it a stable equilibrium and how it differs from dominant strategy?

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Question 4

Appeared in Year: 2020

Describe in Detail Subjective▾

The kinked demand curve describes price rigidity. Explain how the model works. Why does price rigidity occur in oligopolistic market?

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Explanation

According to the kinked demand curve model, each firm faces a demand curve that is kinked at the currently prevailing price.

  • Every firm believes that if they increase their prices, the other firms will not do the same, which will eventually led to the shift in consumer՚s preference towards its competitors. This reasoning implies a highly elastic dem…

… (351 more words, 10 figures) …

Question 5

Appeared in Year: 2021

Describe in Detail Subjective▾

What do the Cournot and Bertrand models have in common? What are the differences between these two models?

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Explanation

Cournot Competition describes an industry structure (i.e.. , an oligopoly) in which competing companies simultaneously (and independently) chose a quantity to produce. The market price is determined by using the total supply of all firms. As higher prices can only be possible when level of output is low, each company has to make expectations regard…

… (295 more words) …