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::: vuaskari.com ::: ECO401 Midterm Paper 26-11-2011

Assalamu Alaykum Warahmatullahi WaBarakatuhu,
 

How the principle of diminishing marginal rate of technical substitution is related to the law of diminishing returns.   3 Marks

 

Assuming that supernatural profits can be made in the short run in a monopolistically competitive industry; will there be any difference in the long-run and short-run elasticity of demand? Justify your answer.    3 Marks

 

 

From the information given below:   5 Marks

TR = 100Q-Q2

 

Prove that the slope of marginal revenue (MR) is twice steeper than the slope of average revenue (AR) curve.

 

How can we achieve optimum combination of factors of production if:     5 Marks

 

                                              MPPk > MPPL

                                                 PK          PL

 

 

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