We read your photo as:

I. Perfect competition is a market structure characterized by a large number of buyers and sellers, homogeneous products, perfect information, and free entry and exit for firms. No single firm can i

Economics

ScanSolve AI Answer

Answer

b(ii)

23\frac{2}{3}

Step-by-step solution

5 steps

Part a

i. Perfect competition is a market structure characterized by a large number of buyers and sellers, homogeneous products, perfect information, and free entry and exit for firms. No single firm can influence the market price.
ii. Monopolistic competition is a market structure with many firms selling differentiated products. There is free entry and exit, and each firm has some degree of market power due to product differentiation.
iii. Oligopoly is a market structure dominated by a small number of large firms. These firms are interdependent, meaning the actions of one firm significantly impact the others, and there are significant barriers to entry.

Part b(i)· 1 step

Step 1: Identify the equilibrium condition.

Equilibrium occurs where market demand equals market supply.

  1. Locate the row in the table where market demand equals market supply.

    From the table:

    Price (FCFA)Market demand (kg)Market supply (kg)304580255070206060157050108045\begin{array}{|c|c|c|} \hline \text{Price (FCFA)} & \text{Market demand (kg)} & \text{Market supply (kg)} \\ \hline 30 & 45 & 80 \\ 25 & 50 & 70 \\ \textbf{20} & \textbf{60} & \textbf{60} \\ 15 & 70 & 50 \\ 10 & 80 & 45 \\ \hline \end{array}

    At a price of 20 FCFA, market demand is 60 kg and market supply is 60 kg.

    The equilibrium price is 20 FCFA because at this price, the quantity demanded by consumers exactly matches the quantity supplied by producers, leading to no surplus or shortage in the market.

Part b(ii)

23\frac{2}{3}

Step 1: Identify the initial and final prices and corresponding quantities supplied from the table.

Initial price (P1P_1) = 15 FCFA, initial quantity supplied (Q1Q_1) = 50 kg.
Final price (P2P_2) = 25 FCFA, final quantity supplied (Q2Q_2) = 70 kg.

  1. Calculate the percentage change in quantity supplied using the midpoint formula.

    %ΔQs=Q2−Q1(Q1+Q2)/2=70−50(50+70)/2=20120/2=2060=13\%\Delta Q_s = \frac{Q_2 - Q_1}{(Q_1 + Q_2)/2} = \frac{70 - 50}{(50 + 70)/2} = \frac{20}{120/2} = \frac{20}{60} = \frac{1}{3}

  2. Calculate the percentage change in price using the midpoint formula.

    %ΔP=P2−P1(P1+P2)/2=25−15(15+25)/2=1040/2=1020=12\%\Delta P = \frac{P_2 - P_1}{(P_1 + P_2)/2} = \frac{25 - 15}{(15 + 25)/2} = \frac{10}{40/2} = \frac{10}{20} = \frac{1}{2}

  3. Calculate the price elasticity of supply (PES).

    PES=%ΔQs%ΔP=1/31/2=13×21=23PES = \frac{\%\Delta Q_s}{\%\Delta P} = \frac{1/3}{1/2} = \frac{1}{3} \times \frac{2}{1} = \frac{2}{3}

    The price elasticity of supply is 23\boxed{\frac{2}{3}}.

Part b(iii)· 1 step

Step 1: Compare the imposed price with the equilibrium price.

The equilibrium price is 20 FCFA. The government imposes a price of 30 FCFA.
Since 30 FCFA > 20 FCFA, the imposed price is above the equilibrium price.

  1. Identify the name given to a government-imposed price above the equilibrium.

    A government-imposed price set above the equilibrium price is called a price floor.

    The name given to such a price is a price floor.

Was this helpful?

Try one yourself

A new problem that tests the same skill.

Still stuck on this one?

Ask a follow-up, and the answer starts from this question.

Got a different question?Ask your own question

More Economics Questions

Q4.10.1. The market structure depicted above is perfect competition.Q4.5.1. The market structure represented by the graph above is perfect competition.QExplain the implications of 'perfect competition' and its key characteristics, including firm…Q4.5.1. A market structure describes the competitive environment in which buyers and sellers…QDefine a perfect market.
Browse by topic:Microeconomics
See all Economics questions →
Got a syllabus? Photograph it and I'll tell you what's due and what's worth the most.
Handwritten step-by-step solution preview

Handwritten Step-by-Step Solution

Get this as a handwritten image on WhatsApp — like a tutor wrote it for you.

Try on WhatsApp