Use the rational actor paradigm to predict firm and individual behavior

Assignment 1 - Research Assignment (Total = 30%):

Use the rational actor paradigm to predict firm and individual behavior. Show all your calculations.

Assessment notes: The first assessment has been split into 10 smaller questions designed to firstly develop an understanding and synthesis of key economics concepts which covers a small area of calculation and more importantly the development as well as assessment of fundamental skills you have been exposed to in the course reading material as well as during seminars.

You are required to present your answers by detailing question numbers and submission is via turn it in on LMS. Please do refer to forum discussions for additional guidelines which will be typically posted a couple of days after the first seminar weekend.

  1. Is the following schedule that of a demand or supply function and why? (5 marks)
  2. Price Quantity
    2 20
    3 30
    4 50
    5 90
  3. Use the information in the table below to answer the following questions (Total = 10 marks)
  4. Price Quantity Demanded (QD) Quantity Supplied (QS)
    10 1000 0
    20 700 200
    30 500 500
    40 300 800
    50 100 1100
    1. What is the market equilibrium price in this case? (1 marks)
    2. What would happen in this market if the price were set to 40? (2 marks)
    3. What would happen in this market if the price were set to 10? (2 marks)

    For questions 3-5 use the following table (total = 15 marks):

      Consumer 1 Consumer 2 Consumer 3 Firm 1 Firm 2
    Price QD QD QD QS QS
    10 20 22 30 0 10
    20 17 18 25 15 25
    30 13 15 22 20 30
    40 7 6 10 25 55
    50 0 3 5 55 70
  5. What is the equilibrium price in this market? (5 marks)
  6. What would happen in this market if a price floor were set at 5? (5 marks)
  7. What would happen in this market if a price ceiling were introduced at 1? (5 marks)

For question 6 and 7 use the following table:

  1. Calculate the value for (a), (b), (c), (d), (e), (f), (g), (h), (i), and (j). (2 marks for each value)
  2. How many unit(s) should the supplier produce (based on the marginal revenue and marginal cost)? (10 marks)
  3. A market demand function is given by the equation, Quantity demanded (Qd) = 200 – 2P. Determine the value of consumer surplus if price is equal to 50. Draw the consumer surplus graph and calculate the consumer surplus. (10 marks)
  4. You are given market data that says when the price of pizza is $5, the quantity demanded of pizza is 50 slices and the quantity demanded of cheese bread is 150 pieces. When the price of pizza is $2, the quantity demanded of pizza is 120 slices and the quantity demanded of cheese bread is 60 pieces.
    1. Can the Price-Elasticity of Demand be calculated for either good? Why? (5 marks)
    2. If so, calculate the PED (10 marks)
  5. PROTON Holdings Berhad (PHB; informally Proton) is a Malaysian automotive company and automobile corporation active in automobile design, manufacturing, distribution and sales. Proton was established in 1983 as Malaysia's sole national badged car company until the advent of Perodua in 1993. The company is headquartered in Shah Alam, Selangor, and operates additional facilities at Proton City, Perak. 'Proton' is a Bahasa Malaysia acronym for Perusahaan Otomobil Nasional (National Automobile Company).
    1. Analyze short run and long run cost for PHB (10 marks)
    2. Provide three (3) recommendations on ways to reduce long run cost for PHB (10 marks)