Question

b) If this is a perfectly competitive market, what is the equilibrium quantity and price? Answer: c) What area represents the deadweight loss caused by the monopolist? Answer: 3. The economic student association at the University X is hiring students to make banners "I love economics" for the coming conference. Complete the following table and plot the production function and the cost function for producing banners. (Marks 10) Number of Output Marginal Cost of Cost of Total Cost Students Product of Equipment Students Hired Labour Hired 100 0 100 100 140 100 60 100 180 5 100 100 20 JUN- 4. If you are operating a business in a perfectly competitive market. You can sell as much as at the market price. Why can you not simply increase your profits by selling a highest quantity? (10 marks) Answer:

Answer 1

3.

MPL = Change in output per unit rise in labor

Cost of per student hired = 20

TC = Cost of equipment + cost of student

Students	Output	MPL	Cost of equipment	Cost of student hired	TC
0	0.00		100	0	100
1	100.00	100	100	20	120
2	180.00	80	100	40	140
3	240.00	60	100	60	160
4	280.00	40	100	80	180
5	300.00	20	100	100	200

Production function is output vs no. of students hired

Total cost is plotted vs total output

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