1326 Words 6 Pages

Assignment - 2

Q 1) Consider the following demand function: 5P=-Q+46 and the following supply

(a) What is the equilibrium price and quantity?

(a) At equilibrium level: Qd = Qs

The equilibrium price is Rs 6 and the equilibrium quantity is 16.

(b) Suppose that the demand function shifts to right such that the new demand

equation now becomes: 5P=-Q+55. What is the new equilibrium price and

(b) At equilibrium level: Qd = Qs

The equilibrium price is Rs 7 and the equilibrium quantity is 20.

Total

Average

Fixed

Variable Cost

Cost

(AVC)

(TFC)

Average Total

Cost

(ATC)

0 0 420 420 - - -

10 100 520 420 10 52 100

20 180 600 420 9 30 80

30 240 660 420 8 22 60

40 280 700 420 7 17.5 40

50 350 770
In Monopolistic Competition there is a

little imperfect Information. That means

that the buyers and sellers do not have

complete information of the market.

Monopolistic Competition uses

advertising to shift the demand in the

In Oligopoly market there is slight

imperfect information.

Oligopoly market uses very little

advertising to create demand in the

market.

Monopolistic Competition Oligopoly

In Monopolistic Competition the firm is

In Monopolistic Competition Maximum

Profits are attained when the marginal

revenue is equal to marginal cost.

Oligopoly market uses Game Theory

to set Price in the market.

In Oligopoly market maximum Profit

is attained when marginal revenue is

equal to marginal cost.

(b) Explain the concept of diversification in detail and differentiate between

Horizontal and Vertical Diversification with suitable examples

Diversification is a strategy that takes an organization into new markets with new

products or services. Organizations may pick a diversification strategy for distinctive

Firstly, organizations may wish to make and endeavor economies of scope, in which

the organization tries to use its energizing resources and proficiencies in different

markets. This can regularly be the situation if organizations have under-used resources

or capacities that can't be effectively arranged or shut. Utilizing a diversification

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