Question 1 (a)

  • Elastic Supply: Percentage change in quantity supplied exceeds the percentage change in price

  • Elastic Supply: Price elasticity of supply is greater than one

Question 1 (c)

  • Perfectly elastic supply --> horizontal supply curve

    $3 80 100 QUANTITY

Question 3 (a)

  • Monopolistic Competitive Market

    • downward sloping demand curve

    • MR curve below the demand curve

    • LRATC tangent to the demand curve

    pm \_ Pm & Qm intersect at the downward sloping sect'on Of the LRATC MC I-RATC Demand QUANTITY MR

    Long-Run Average Total Cost Curve LRATC The long-run average total cost curve is the heavily shaded, blue smooth curve. The LRATC curve is not scalloped because it is assumed that there are so many plant sizes that the LRATC curve touches each SRATC curve at only one point. SRATCI st9ATC2 Ecccomies Of ScaEe SRArq A Constant B Diseconcrnies Of Scale Returns to Scale Ouantiw of Output Wnimum efficient scale

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