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    PBA4801 ASSIGNMENT 1 2021 Surname-Initials Student Number

    Uploaded by

    Tawanda Makombe
    This document contains a 3 question assignment on economics for managers. Question 1 asks students to explain using diagrams how a competitive firm's price compares to its marginal cost, how profit-maximizing competitive firms decide to shut down using graphs, and when such firms decide to exit a market. Question 2 discusses the effects of a tax on detergent sellers and the effects of a subsidy on public rail transport using supply and demand analysis. Question 3 asks students to describe ways policymakers can respond to inefficiencies caused by monopolies and list problems with each response.

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    PBA4801 ASSIGNMENT 1 2021 Surname-Initials Student Number

    Uploaded by

    Tawanda Makombe
    40 views5 pages
    This document contains a 3 question assignment on economics for managers. Question 1 asks students to explain using diagrams how a competitive firm's price compares to its marginal cost, how profit-maximizing competitive firms decide to shut down using graphs, and when such firms decide to exit a market. Question 2 discusses the effects of a tax on detergent sellers and the effects of a subsidy on public rail transport using supply and demand analysis. Question 3 asks students to describe ways policymakers can respond to inefficiencies caused by monopolies and list problems with each response.

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    This document contains a 3 question assignment on economics for managers. Question 1 asks students to explain using diagrams how a competitive firm's price compares to its marginal cost, how profit-maximizing competitive firms decide to shut down using graphs, and when such firms decide to exit a market. Question 2 discusses the effects of a tax on detergent sellers and the effects of a subsidy on public rail transport using supply and demand analysis. Question 3 asks students to describe ways policymakers can respond to inefficiencies caused by monopolies and list problems with each response.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    40 views5 pages

    PBA4801 ASSIGNMENT 1 2021 Surname-Initials Student Number

    Uploaded by

    Tawanda Makombe
    This document contains a 3 question assignment on economics for managers. Question 1 asks students to explain using diagrams how a competitive firm's price compares to its marginal cost, how profit-maximizing competitive firms decide to shut down using graphs, and when such firms decide to exit a market. Question 2 discusses the effects of a tax on detergent sellers and the effects of a subsidy on public rail transport using supply and demand analysis. Question 3 asks students to describe ways policymakers can respond to inefficiencies caused by monopolies and list problems with each response.

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    1

    COVER PAGE

    PBA4801

    ECONOMICS FOR MANAGERS

    ASSIGNMENT 1 14 APRIL 2021

    STUDENT NAME:

    STUDENT NUMBER:

    QUESTION MAX MARK MARK %

    1 25

    2 25

    3 25

    TOTAL 75
    2

    Question1 [25 Marks]

    When analysing the firm’s behaviour as a business economist, it is often important to


    understand the total revenue, costs and margin analysis.

    a) Explain using a relevant diagram how the price faced by a profit-maximising


    competitive firm compare to its marginal cost? [5 Marks]

    b) Explain using relevant graphs how profit-maximising competitive firm decide to shut
    down? [5 Marks]

    c) When does a profit-maximising competitive firm decide to exit a market? [5 Marks]

    d) As a business manager, use relevant diagrams as well as microeconomic theory,


    discuss why competitive firms stay in business if they make zero profit? [10 Marks]
    3

    Question 2 [25 Marks]

    Business economists us the term tax incidence to refer to the distribution of a tax burden. As
    such, we can analyse the incidence of a tax by using the tools of supply and demand.

    a) Suppose a government imposes a tax of ZAR1.00 per bottle on sellers of an industrial


    detergent. Explain three dimensions in which you can explain the effects of this tax?
    What are the implications of such a tax? [12.5 Marks]

    b) A government unveiled a new subsidy on public rail transport in a country. Critically


    analyse the three dimensions in which the effect of the subsidy can be felt by all the
    actors in the sector. [12.5 Marks]
    4

    Question 3 [25 Marks]

    Monopolies cause inefficiencies and a lot of deadweight losses. In some cases, these
    inefficiencies can be mitigated through price discrimination by the monopolist, but at other
    times they call for policy makers to take an active role. Describe the ways through which
    policy makers can respond to the inefficiencies caused by monopolies in an economy. List
    potential problems associated with each of these policy response mechanisms. [25 Marks]
    5

    List of References

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