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    MM5006 Confidential

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    Mirta
    This document contains instructions and questions for an online midterm exam for a Business Economics course. It includes 4 questions assessing students' understanding of revenue curves, business decision making, market equilibrium graphs, and measures of market concentration such as the four-firm concentration ratio and Herfindahl index. Students are asked to derive and plot total, average, and marginal revenue curves; evaluate the decision to start a photocopy business; illustrate the impact of various market changes on equilibrium price and quantity; and calculate concentration ratios and the Herfindahl index for two markets to determine which is more competitive.

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    MM5006 Confidential

    Uploaded by

    Mirta
    33 views3 pages
    This document contains instructions and questions for an online midterm exam for a Business Economics course. It includes 4 questions assessing students' understanding of revenue curves, business decision making, market equilibrium graphs, and measures of market concentration such as the four-firm concentration ratio and Herfindahl index. Students are asked to derive and plot total, average, and marginal revenue curves; evaluate the decision to start a photocopy business; illustrate the impact of various market changes on equilibrium price and quantity; and calculate concentration ratios and the Herfindahl index for two markets to determine which is more competitive.

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    This document contains instructions and questions for an online midterm exam for a Business Economics course. It includes 4 questions assessing students' understanding of revenue curves, business decision making, market equilibrium graphs, and measures of market concentration such as the four-firm concentration ratio and Herfindahl index. Students are asked to derive and plot total, average, and marginal revenue curves; evaluate the decision to start a photocopy business; illustrate the impact of various market changes on equilibrium price and quantity; and calculate concentration ratios and the Herfindahl index for two markets to determine which is more competitive.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views3 pages

    MM5006 Confidential

    Uploaded by

    Mirta
    This document contains instructions and questions for an online midterm exam for a Business Economics course. It includes 4 questions assessing students' understanding of revenue curves, business decision making, market equilibrium graphs, and measures of market concentration such as the four-firm concentration ratio and Herfindahl index. Students are asked to derive and plot total, average, and marginal revenue curves; evaluate the decision to start a photocopy business; illustrate the impact of various market changes on equilibrium price and quantity; and calculate concentration ratios and the Herfindahl index for two markets to determine which is more competitive.

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    You are on page 1of 3

    MM5006 CONFIDENTIAL

    MIDTERM EXAMINATION
    SEMESTER II 2020/2021 SESSION

    COURSE : BUSINESS ECONOMICS


    COURSE CODE/ CLASS : MM5006 /MBA YP 62C
    DATE : 29 MARCH 2021
    VENUE : ONLINE HOME!
    TIME : 09.15 – 11.00

    :
    NIM

    :
    PROGRAM

    :
    NAME

    Question 1 (15 Marks)

    Given the following total-revenue function

    TR = 9Q – Q2

    i. Derive the total, average, and marginal revenue schedules from Q = 0 to Q = 6


    by 1.
    (5 marks)

    ii. On the same set of axes, plot the total, average, and marginal revenue schedules
    of part (i).
    (5 marks)

    iii. With reference to your figure in (ii), explain the relationship among the total,
    average, and marginal revenue curves.
    (5 marks)

    Question 2 (15 Marks)

    Imagine that you are currently a college student working at a part time job. You work 15
    hours per week as a taco specialist at “TACOS! TACOS! TACOS!”, and earn $8 per hour. One
    day you realize you’re tired of smelling like refried beans all the time and begin thinking
    about starting your own business. After doing some investigation you decide to spend 15
    hours per week running a photocopy service in your dorm. You have determined the
    following as likely projected expenses and revenues for your first four weeks:
    MM5006 CONFIDENTIAL

    Revenue: $800 (8000 copies sold at $.10 per copy)


    Costs: $400 for photocopy machine rental
    $80 for paper (8000 pages at $.01 per page)
    Using this information you decide to start the business. Did you make a wise decision?

    Question 3 (15 Marks)

    Using graphs, explain what will happen to equilibrium price and equilibrium quantity of a
    product as a result of each of the following scenarios:
    a. A rise in the number of buyers and a decrease in the cost of producing the product.
    b. A decrease in the number of suppliers and an increase in the number of buyers.
    c. An increase in the cost of production and a decrease in consumers’ income.
    d. Advances in the technology used to produce the product and a decrease in the price of a
    substitute.
    e. A decrease in the tax on the product imposed on consumers and a decline in the price of
    a complement.
    f. A government program that subsidizes the price of the product to consumers and a tax
    imposed on the producer

    Question 4 (15 Marks)

    (a) For each of the following calculate the four-firm concentration ratio and the Herfindahl
    index.

    2/4

    Market 1: 44 firms in the market. The four largest firms each have a 15% market share, the
    remaining firms each have a 1% market share.
    Market 2: 7 firms in the market. The six largest firms each have a 15% market share, the
    remaining firm has a 10% market share.
    (b) Which market is more competitive? Explain. NOTE: Be sure to make use of your
    calculations from (a) above in your explanation.

    -End of Questions-
    MM5006 CONFIDENTIAL

    3/4

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