QUESTION 1

A) The firms face the force of raw competition. This type of extreme competition is called perfect competition.

expound the concepts of:

• perfect competition
• characteristics of perfect competition
• deviation from perfect competition

B) Every firm would love to earn economics profits in the long-run and short run, once firms have had the chance to adjust to the levels of profits or losses experienced. clarify the statement in the spectrum of the long run competition and short run competition.

QUESTION 2

A) For constructive managerial decision making, the firm must know the sensitivity responsiveness of demand to changes in factors that make up the underlying demand functions. define and explain the elasticity of demand.

B) whenever there is a change in some variables it brings about a change in the quantity for the commodity purchased over a specified period of time. Discuss the different types of elasticity of demand.

Question 3

the behaviour of long-run costs and short- run costs depend on the firms production function. Elucidate.

QUESTION 4

A) economics is the science of choice, at a time of enormous change, opportunity and challenge. economists use models to explore the effects of different policies or other influences on the economy.

• Define economics.
• economic models.

B) Economics is a social science and like all scientists, economics distinguish two types of statements. Elucidate.