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Assignment Details

Question 1

a) The following table shows the demand and supply schedules for

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

(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