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Unformatted text preview: med to be perfectly elastic (i.e. horizontal at the going market price). [5 marks] d) Explain why the demand curve facing a monopolist is less elastic than one facing a firm that operates in a monopolistically competitive market (all other factors held constant). [5 marks] [TOTAL : 20 MARKS] 11 BMME5103/SEPT 07-F/KN Question 4 Malaysian Export-Import Shipping Company (MEISC) operates a general cargo carrier service between Port Klang and several European ports. It hauls two major categories of freight: manufactured items and semi-manufactured raw materials. The demand functions for these two classes of goods are: P1 = 100 – 2Q1 P2 = 80 – Q2 where, Qi = tons of freight moved. The total cost function for MEISC is TC = 20 + 4(Q1 + Q2) a) Calculate the firm’s total profit function. [4 marks] b) What are the profit-maximising levels of price and output for the two freight categories? [4 marks] c) At these levels of output, calculate the marginal revenue in each market. [4 marks] d) What are MEISC total profits if it is effectively able to charge different prices in the two markets? [4 marks] e) If MEISC is required by law to charge the same per-ton rate to all users, calculate the new profit-maximising level of price and output. What are the profits in this situation? [4 marks] [TOTAL : 20 MARKS] [TOTAL : 100 MARKS] QUESTION PAPER ENDS HERE 12...
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This document was uploaded on 02/09/2014.

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