Mock - SA - P3
Mock - SA - P3
Mock - SA - P3
(a) Using information from Figure 1, calculate Firm A’s total fixed costs. [2]
(b) (i) The market price of almonds is $11 per kilogram. Using Figure 1, identify the
quantity of almonds Firm A must produce in order to maximize profits. [1]
(b) (ii) Calculate the economic profit/loss when Firm A is producing at the output level
identified in part (b)(i). [2]
(c) (i) Based on the information in Figure 2, state whether the firms in this market are
making normal profits, economic profits or economic losses. [1]
(c) (ii) On Figure 2, draw and label appropriate additional curves to show how a
perfectly competitive market will move from short-run equilibrium to long-run
equilibrium. [2]
(c) (iii) Using your answer to part (c)(ii), explain how the market adjustment takes
place. [2]
(e) Explain two reasons why a monopoly may be considered desirable for an
economy. [4]
Q. 2. In the diagram below, the price ceiling is set at EUR 30 for good X.
Q. 3. Explain the term negative externality of production and calculate the per unit
tax to eliminate the externality from the diagram below. [4]