Supply and Demand,Elasticity, Production and Cost,Competition, Case Study

Supply and Demand,Elasticity, Production and Cost,Competition, Monopoly, Monopolistic Competition, Oligopoly, and Game Theory - Case Study Example This will make the suppliers hoard the goods in anticipation for higher prices hence decrease in supply. Consequently, customers will demand more and eventually lead to further increase in prices. c). total revenue = price *quantity. When P=$10, the total revenue is 10*500=$5000. When price increases to $20, total revenue is P*Q= 20*300=$6000. This shows that the increase in price by $10 increase total revenue by ($6000-$5000). This is an increase of $1000 revenue. 6.0 When the demand for labor is inelastic, the rate of unemployment increases. For example, if labor demanded is 300 and skilled workers are 600, 300 people will remain unemployed. As more people gains skills, demand does not change hence more people remain jobless. d) The optimal number of workers to be hired is five. Marginal cost of any additional worker should not exceed his/her marginal revenue. Hiring sixth person will cost more than the revenue he or she can generate. 10. For the business to continue its operation, it should be able to break even. At this point, total revenue (TR) = total cost (TC). However, at break even the business should be able to cover all its variable cost from the revenue. For 3 months, revenue is $4000, while variable cost is ($12000-$6000) = $6000. Therefore, it should close down since it is not able to generate enough revenue to cover fixed