Question1. Make a distinction between the short run and long run profits of the competitive firm by using the graphical representations.
Question2. Contrast between perfect competition and monopoly.
Question3. Describe the concept of economies of scale and law of diminishing return.
Question4. Illustrate what is meant by income elasticity, price elasticity and income elasticity of the demand.
Question5. What are the practical implications of above concepts for business?
Question6. Assume that the demand of butter rises from 20 to 25 when its price reduces from Rs 100 to Rs 80. Assume also that the demand for margarine reduces from 30 to 26.
(i) Evaluate the price elasticity demand of butter.
(ii) Evaluate the cross elasticity demand for margarine.
(iii) How are the two good related? Justify your solution.