Essay Price Elasticity of Demand and Supply – Perfect Competition and Monopoly – Economics Assignment Help

Assignment Task :

Assessment Question :

Price Elasticity of demand and supply

Question 1

The price for cigarettes sold by Big Tobacco Co Ltd was6.00 per packet in March 2018. During the month of March, the consumption of cigarettes was 1000 packets. However, the Board of Directors of Big Tobacco Co Ltd decided to increase the price by 25% during the month of April.  As a manager you noted that price elasticity of demand was 0.8. As a manager Big Tobacco Co Ltd:

1. Advise your management ofthe strategy that could be adopted by your firm to maintain sales.
2. Also, advise your government on recommended interventions in the cigarette market.

Production costs

Question 2

John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering.In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills.John’s course was for 3 months. John had to pay $2,000 as tuition for the 3 months.

After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year. Further, to start the business John used his own premises. He was receiving $12,000from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA.

Based on your calculated accounting profit and economic profit, would you advise John to return to his teaching job?  Show your work

The above diagram illustrates the short run cost curves for Sarah Mat, a rice farmer in Queensland.Calculate the profit or loss for Sarah Mat and, examine the key characteristics for perfect competition firm with reference to Sarah’s farm