Assignment Details
Question 1
a) The following table shows the demand and supply schedules for
headphones.
Price
€
Quantity
Demanded
Quantity
Supplied
40 110 170
34 120 160
30 130 150
26 140 140
22 150 130
20 160 120
16 170 110
(i) Plot the data in the above table on a graph and determine
the equilibrium price and quantity of headphones.
(10 marks)
(ii) Using the same graph you have drawn in part (i) estimate
if there is excess demand or excess supply in the market
at a price of €22. What is the amount of this excess
quantity?
(5 marks)
b) Explain clearly both of the following terms and use diagrams
and examples where appropriate to illustrate your answer.
(i) Cross price elasticity of demand
(ii) Income elasticity of demand
(15 marks)
3
c) If the price of a good (Good X) increases from €12 to €15 and
quantity demanded then falls from 100 units to 50 units. Calculate
the price elasticity of demand for Good X.
(5 marks)
Question 2
Complete the table below which shows the output per day and the
associated costs in a small cake shop and graph the Average
Total Cost curve and Marginal Cost curve
Output
per day
Total
costs €
Fixed
costs
€
Average
total cost
€
Marginal
costs
€
0 14
1 24
2 32
3 42
4 60
5 80
6 102
(30 marks)
Question 3
Compare and contrast any two types of market structures. Use
diagrams and examples to illustrate your answer.
(35 marks)
