Microeconomics Assignment- Economics Assignment Help

Assignment Task

Microeconomics Assignment

Q1. During the initial days of Covid-19 pandemic, we have all witnessed massive shortage of hand sanitizers and masks. The few that were available in the market were exorbitantly priced. Soon, many more companies started producing these items and in a few months’ time, these items were available in plenty again, and prices came down.

Using the concepts learnt during the course, explain this phenomenon of high price (with few firms) in the short run and low price (with more firms) in the long run. Use an appropriate diagram to support your answer. Assume that the market for hand sanitizers and masks are perfectly competitive.

• Explain how in short run in a competitive market, supernormal profits are possible, but it gets wiped out in the long run when more firms enter into the market attracted by the profit (free entry). The student is expected to explain how in the long run each remaining firm in the market earn a normal profit.
• Draw the perfect competition long run adjustment diagram.

Q-2 Let’s assumes you are planning to buy a new laptop. Explain the demand determinants. Which of the demand determinant will have higher weightage and why?

Question 3. Assume a company (e.g. Car Trade) which is dealing with sale purchase of used cars are making huge profits. Higher profits may attract entry of new firms into the food delivery industry. Explain what could be the impact of entry on the firms and the industry as a whole.

1. Average cost of rendering the delivery service for the existing players
2. Price/commissions that they charge from their customers
3. Profitably
4. How would the break-even point impacted due to entry of new firms?

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