d

Study Guide
Taylors University

Diploma in Business
Business Programmes
August Semester 2016

ECN40104

MICROECONOMICS

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TUTORIAL 1 (WEEK 2): Introduction to Microeconomics & Economic Systems
(CHAPTER 1 & 3)
Tutorial Exercises:
SECTION A
1. One of its most basic economic problems is that society must decide how to
allocate its available resources.

T/F

2. The study of microeconomics and macroeconomics differ in that

microeconomics examines the whole economy while macroeconomics
studies the individual units of the economy.

T/F

3. The economic problem of scarcity refers to limited wants and unrestricted

resources.

T/F

SECTION B
1. Consider a typically shaped production possibility curve that is downward
sloping and bowed outwards for an economy producing agricultural goods
(horizontal axis) and manufacturing goods (vertical axis). What are the likely
effects on the curve of the following changes:
(i)
(ii)
(iii)
(iv)

a prolonged drought
a new technology of robotic engineering which increases the
productivity in manufacturing
large scale immigration
a war that leaves the many people dead and industries destroyed

2. A nation with fixed quantities of resources is able to produce any of the following
combinations of bread and butter.
Production alternatives

Loaves of bread

Butter

75

60

12

45

22
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a)
b)
c)
d)

30

30

15

36

40

Using the data in the table, graph the PPC (with butter on the vertical axis).
What is the opportunity cost of producing the first 15 loaves of bread?
What is the opportunity cost of producing the first 12 butter?
If the economy is currently at point E, what is the opportunity cost of producing 5
more loaves of bread?

SECTION C
1.

Explain and illustrate the concepts of scarcity, production efficiency and tradeoff
using the product possibilities frontier.

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________________________________________________________
TUTORIAL 2 (WEEK 3): Price Theory: Demand and Supply (CHAPTER 4)
Tutorial Exercises:
SECTION A
1. A market demand schedule for a product indicates that there is a direct
relationship between price and quantity demanded.

T/F

2. The law of demand is illustrated by a demand curve that is downward

sloping.

T/F

3. If Coke and Pepsi are substitutes, then an increase in the price of Coke will
result in a decrease in demand for Pepsi.

T/F

4. Other things being equal, the law of demand implies that as the price of
DVDs increases, the quantity of DVDs demanded will increase.

T/F

5. If product Y is a normal good, an increase in consumer incomes will shift the

demand curve for product Y to the right.

T/F

6. If two goods are close substitutes a fall in the price of one will decrease the
demand for the other.

T/F

7. The price of cheese cakes increased best explains why the quantity
demanded of cheese cake increased.

T/F

8. Market demand curves are found by adding horizontally the demand curves
of the many individual consumers in the market.

T/F

9. A technological advance for making a product causes an increase in the

demand of the product.

T/F

10. An increase in price for computers would cause a fall in the demand for
computers.

T/F

11. According to the law of supply, there is a negative relationship between price
and the quantity supplied.
T/F
12. If the price of potato falls, there will be an increase in supply of potato salad. T / F
!4

13. A technological advance for making a product causes a decrease in the

supply of the product.

T/F

14. A change in the price of the good itself would cause a shift in the supply
curve.

T/F

15. A decrease in quantity supplied is represented by an upward movement

along the same supply curve.

T/F

SECTION B
1. What will happen to the demand curve for clothes manufactured in Malaysia, if there
is an increase in the income level of Malaysians?
2. What will happen to the demand curve for clothes manufactured in Malaysia, if there
is a reduction in their prices?
3. What will happen to the demand curve for Desktop Computers, if their prices are
expected to rise next month?
4. What will happen to the demand curve for Desktop Computers, if there is a fall in the
price of laser printers?
5. On the graphs below, show the effects of each of the following on the supply of
coffee worldwide. Identify the responsible determinant of supply in the space provided.
A. Freezing temperatures wipe out half of Brazils coffee crop.
Determinant: _________________
Price
S

Quantity

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B. Wages of coffee workers in Latin America rise as unionization efforts

succeed.
Determinant: __________________
Price
S

Quantity

C. Indonesia offers big subsidies to its coffee producers.

Determinant: ___________________
Price

Quantity

D. Genetic engineering produces a super coffee bean that grows faster and
needs less care.
Determinant: ____________________
Price
S

Quantity

E. Coffee suppliers expect prices to be higher in the future.

Determinant: ____________________
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Price
S

Quantity

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SECTION C
1. With the aid of diagram/diagrams, distinguish between a change in quantity demanded
and a change in demand.
2. Distinguish between:
a) normal and inferior goods;
b) a complement and a substitute.

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TUTORIAL 3 (WEEK 4): Price Theory: Market Equilibrium (CHAPTER 4)
Tutorial Exercises:
SECTION A
1. A market shortage is the amount by which the quantity supplied exceeds the
quantity demanded at a given price.

T/F

2. DVD players and DVDs are complements. A fall in the player price would
cause the equilibrium price and quantity of DVDs to rise.

T/F

3. A surplus can be eliminated by allowing the price to fall.

T/F

4. Given a fixed supply of lamb chops, a reduction in the price of chicken

chops will raise the price of lamb chops.

T/F

5. A rightward shift of the market supply curve, ceteris paribus, causes

equilibrium price to increase and quantity to decrease.

T/F

6. A change in the expectation of consumers causes a shift in the demand

curve, while a change in the current price of the goods causes a movement
along the demand curve.

T/F

7. When it passed through Louisiana in the summer of 2005, a hurricane

destroyed approximately a quarter of the sugar cane crop. Ceteris paribus,
the supply of sugar fell and the price of sugar decreased.

T/F

8. An increase in the wage paid to rambutan pickers will cause the supply
curve for rambutans to shift to the left, resulting in higher prices for
rambutans.

T/F

9. The market supply curve is the vertical summation of the supply curves of
the individual producers of the product.

T/F

Section B

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1. What will happen to the equilibrium price and quantity of butter in each of the
following cases? You should state whether demand or supply (or both) have shifted
and in which direction (in each case assume ceteris paribus).
(a) A rise in the price of margarine
(b) A rise in the price of bread
2. The weekly demand and supply schedules for Quikgold T-shirts (in millions) in a free
market is as follows:
Price (in
RM)

Quantity
demanded

10

12

14

16

18

20

Quantity
supplied

18

16

14

12

10

(a) What is the equilibrium price and quantity?

(b) Assume that changes in fashion cause the demand for Quikgold T-shirts to rise by 4
million at each price. What will be the new equilibrium price and quantity? Show
the changes on a separate diagram.
3. The market for organically grown wheat
Price per tonne (RM)

Quantity demanded (tonne)

Quantity supplied (tonne)

100

770

220

140

680

260

180

610

320

220

550

400

260

500

500

300

460

640

340

400

880

380

320

1400

a) What is the size of shortage or surplus at a price of RM 180 per tonne?

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b) What is the size of shortage or surplus at a price of RM 340 per tonne?
c) What is the equilibrium price and quantity?

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TUTORIAL 4 (WEEK 5): Application of Price Theory: Price elasticity of demand
(CHAPTER 5)
Tutorial Exercises:
SECTION A
1. The price elasticity of demand is the percentage change in price divided by
the percentage change in quantity demanded.

T/F

2. When the price of coffee increases 8%, quantity demanded decreases 5%.
The elasticity of coffee must be inelastic.

T/F

3. A vertical demand curve may be described as perfectly price inelastic.

T/F

4. If the elasticity coefficient of demand for coconuts is 0.40, then a 20% fall in
price will result in an 8% fall in quantity demanded.

T/F

5. The more substitutes there are for the product the more price elastic the
demand for the product is.

T/F

6. Demand is said to be inelastic when a reduction in price results in a

decrease in total revenue.

T/F

SECTION B
1. When the price of bread rises from $1.25 to $1.50 per loaf, quantity demanded falls
from 5,800 per week to 5,500. Calculate total revenue both before and after the price
change. What can we tell about the price elasticity of demand for bread?
2. The demand schedule for computer chips is as follows:
Price (RM)

Quantity demanded (unit)

200

50

250

45

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300

40

350

35

400

30

a) Using the mid-point formula, calculate the price elasticity of demand when the
price falls from
i) RM 400 to RM 350
ii) RM 350 to RM 300
iii) RM 300 to RM 250
iv) RM 250 to RM 200
b) Based on your answers in (a), what is the conclusion that you can make regarding
the elasticity along a straight-line demand curve?
3. What are the factors that influence the price elasticity of demand?

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TUTORIAL 5 (WEEK 6): Application of Price Theory: Cross and income elasticity
of demand. Price elasticity of supply (CHAPTER 5)
Tutorial Exercises:
SECTION A
1. If the quantity demand of tea decreases by 2% when the price of coffee
decreases by 8%, the cross elasticity of demand between tea and coffee is
0.25.

T/F

2. If the cross elasticity of demand between fish and chicken is 2, then a 2%

increase in the price of fish will result in a 4% decrease in the quantity of
chicken demanded.

T/F

3. The cross elasticity of demand for product X with respect to the price of
product Y is 1.00. It can be concluded that X and Y are complementary
products.

T/F

4. If bus travel is an inferior good, then its income elasticity of demand will be
negative.

T/F

5. When income changes, the quantity demanded for a commodity remains the
same, the income elasticity of demand for the good is negative one.
T/F

6. A positive income elasticity of demand coefficient indicates that a product is

an inferior good.

T/F

7. A vertical supply curve may be described as perfectly price inelastic.

T/F

8. The main determinant of the price elasticity of supply of a product is the

length of time sellers have to adjust to a change in price.

T/F

9. The supply curve for cars will be more elastic the longer the time interval
considered.

T/F

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SECTION B
1. The table below shows the quantity of three goods (A, B and C) purchased in two
years (year 1 and year 2). The only factor affecting demand between these two years
is consumer incomes.
Year

Demand for A Demand for B Demand for Consumer annual

(unit)
(unit)
C (unit)
income (RM )

Year 1

30

52

190

45000

Year 2

50

48

210

55000

a) What is the value of income elasticity of demand for the three goods when
consumer annual income rises? (Use the midpoint formula).
b) Which of the goods is an inferior good?
2. When Frank's income rises from $29,000 to $34,000 per year, he increases his
purchases of tomatoes from 20 pounds to 28 pounds per year. What is Frank's income
elasticity of demand for tomatoes? (Use the midpoint formula). According to Frank,
are tomatoes an inferior or normal good?
3. When the price of a gallon of orange juice rises from $1.50 to $2.00, the number of
gallons of apple juice demanded rises from 20,000 to 30,000 per year. Use the
midpoint formula to calculate the cross-price elasticity between orange juice and
apple juice. What do the sign imply about the relationship between these two goods?

!15

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TUTORIAL 6 (WEEK 7): Theory of the Firm I: production in the short run
(CHAPTER 14)
Tutorial Exercises:
SECTION A
1. The major distinction between the short run and the long run in economics
is that in the short run there is at least one fixed factor of production,
whereas in the long run there are no fixed factors.

T/F

2. The short run is a period of time so short that all inputs are fixed.

T/F

3. When total product is at its maximum level, the average product of labour is
zero.

T/F

4. If an increasing quantity of variable factors is applied to a given quantity of

fixed factors, the marginal product will reach a maximum sooner than will
the average product.

T/F

5. The marginal product of labour is the amount of extra output that is

produced when one extra worker is added to a fixed amount of other
factors.

T/F

6. Average product of labour measures the addition to total output when an

additional worker is hired.

T/F

7. The law of diminishing returns is expressed in terms of an eventual decline

in the marginal product of an input.

T/F

8. Suppose, given a particular process, that a doubling of the employment of

some input causes output to increase by less than 100%. You should
conclude that production necessarily displays decreasing returns to scale.

T/F

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SECTION B
1. The table below shows the total product, average product and marginal product of
a firm which uses labor as its main variable input.

Quantity of labor

Total product

Marginal product

Average product

10

10

24

12

45

15

60

70

78

11.86

-8

9.4

-15

6.7

60

a) Complete the above table.

b) At which level of variable input is the total output at its maximum level?
c) Marginal product starts to decline at .. worker.
d) In which range of variable input will the output increase at an increasing rate?

2. As a manager of a fast-food restaurant, you estimate that the total product of labour
used to make meals varies according to the following data:
Number of Workers
(per day)

Total Product of Labor

(meals per day)

30

70

100

120

130

APL

MPL

Fill in the table above.

!17

SECTION C
1. Explain the concepts of total product (TP), average product (AP) and marginal
product (MP).
Then explain, by using a graph, the relationships that exist between average product
(AP) and marginal product (MP) as employment of labour increases in the short run.
2. Discuss the short run production function. Your discussion should include the
definition and the law that applies by means of an example and a graphical
representation.

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TUTORIAL 7 (WEEK 8): Theory of the Firm I: Costs of production in the short
run (CHAPTER 14)
Tutorial Exercises:
SECTION A
1. A fixed cost is a cost which the firm would incur even if its output were zero.

T/F

2. Marginal cost and average variable cost are equal at the output where
marginal cost is at its minimum.

T/F

.3. A firms total cost is RM400 and total fixed cost is RM100. If average
variable cost is RM100, the firm will produce 3 units.

T/F

4. If 25 units of a good are produced at a fixed cost of $50 and a total cost of
$550, then the average variable cost of producing the good is $20.

T/F

5. Marginal cost is the extra cost of producing an additional unit of output.

T/F

6. At the quantity of output where average cost has reached its minimum
marginal cost will equal average cost.

T/F

7. If marginal cost is above average variable cost when output rises, average
variable cost must be falling.

T/F

SECTION B
1. The table below shows the total cost incurred by a firm at different level of output.
Output (unit)

Total cost (RM)

30

60

80

90

120
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5

160

216

a) Is this firm operating in the short run period? Why?

b) Calculate the value of average variable cost (AVC) and marginal cost (MC).
c) State the three relationships that exist between AVC and MC.

2. The table below shows the cost schedule for Kuala Lumpur Fried Chicken (KLFC)
Company. Calculate and fill in the missing values in the table below.
Q

TFC
(RM)

TVC
(RM)

TC
(RM)

200

200

500

700

200

750

950

200

900

200

1100

200

AFC
(RM)

AVC
(RM)

ATC (RM)

MC
(RM)

200

1800

2400

375
67

1300

300

50

1600

300

2000

400
29

600

a) What is the range of output where AVC is minimized?

b) Over what range of output are there decreasing marginal cost and increasing
marginal cost?

3. What is the relationship between marginal product and marginal cost?

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TUTORIAL 8 (WEEK 9): Theory of the Firm II: Prod & costs in the long run
(CHAPTER 14)
Tutorial Exercises:
SECTION A
1. Economies of scale can be defined as large-scale production leading to
lower costs per unit of production.

T/F

2. Diseconomies of scale exist over the range of output for which the long run
average cost curve is falling.

T/F

3. When a firm is experiencing diseconomies of scale its average total costs will
decline if it reduces its scale of operations.
T/F
4. In the short run average costs eventually increase because of diminishing
returns, and in the long run average costs eventually increase because of
diseconomies of scale.

T/F

5. Engineers for the Mountain-Bike Company have determined that the 15%
increase in all inputs will cause output to increase by 20%. Assume that
input prices remain constant; you correctly deduce that such a change will
cause long run average costs to increase as output increase.
T/F
6. For constant returns to scale, an increase in a firms scale of production
leads to a no change in average total cost.

T/F

7. When a firm is experiencing economies of scale it should increase the size of

its plant to decrease its average total costs.

T/F

8. Long-run increasing returns to scale exist when the long-run average cost
falls.

T/F

SECTION B
1. Describe the three scales of production in the long run.
2. Distinguish between economies and diseconomies of scales. Provide five factors that
contribute to each one of the scales.
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3. With the aid of a diagram, show and define the minimum efficient scale. Describe its
importance to a firm.

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TUTORIAL 9 (WEEK 10): Market structure: Perfect competition (CHAPTER 15)
Tutorial Exercises:
SECTION A
1.

2.

3.

Perfect competition is an industry with

a.

a few firms producing identical goods.

b.

one firm producing goods.

c.

many firms producing identical goods.

d.

none of the above answers is correct.

The firm in a perfectly competitive market is a price taker. This is based on the
assumption that
a.

the firm has some, but not complete, control over its product price.

b.

there are so many buyers and sellers in the market that any individual firm
cannot affect the market.

c.

each firm produces a homogeneous product.

d.

there is easy entry into or exit from the market place.

In the short run, a perfectly competitive firm can earn economic profits if the
market price is greater than
a.

average total cost

b.

average fixed cost

c.

marginal cost

d.

average variable cost

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4.

1.5

The diagram above shows the short run cost and revenue curves of a perfectly
competitive rice producer. In order to maximize profit, the firm should produce

5.

6.

a.

1,500 tonnes of rice per month.

b.

5,000 tonnes of rice per month.

c.

3,000 tonnes of rice per month.

d.

4,000 tonnes of rice per month.

Refer to the above diagram. At its profit maximizing output, the firm is
a.

breaking even.

b.

earning an economic profit.

c.

making a loss but should continue operating to minimize its loss.

d.

going to shut down its operations.

A perfectly competitive firm should shut down its operations in the short run
when
a.

price is less than average total cost.

b.

price is less than minimum average variable cost.

c.

price is less than marginal cost.

d.

price is less than average fixed cost.

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7.

Output
(tons of rice per year) Total cost
(RM)
0
1,000
1
1,200
2
1,600
3
2,200
4
3,000
5
4,000
Based on the table above which shows NMYs costs, if rice sells for RM600 a ton
at every output level, NMYs profit-maximizing output is
a.

less than one tonne.

b.

two tonnes.

c.

three tonnes.

d.

more than five tonnes.

8.

!
In the above figure, if price is P1, a perfect competition firm will produce

9.

a.

nothing.

b.

where MC is lower than AC.

c.

where MC equals P1.

d.

where AC equals P1.

In the above figure, if the price is P1, the firm is

a.

making a profit.
!25

10.

11.

b.

incurring a loss.

c.

breaking even.

d.

shutting down.

When a firm in a perfect competition market structure achieves long run

equilibrium, which one of the following statements is not true?
a.

Marginal cost is the same with marginal revenue.

b.

Firms in the industry will only gain normal profits.

c.

Marginal cost will be at its minimum level.

d.

Average total cost will be at its minimum level.

A firm produces an equilibrium output in the long run in a perfectly competitive

market. For this output, marginal cost is
a.

greater than average cost.

b.

equivalent with average cost and average revenue.

c.

less than average cost.

d.

less than average variable cost.

SECTION B
1. Assume that a perfectly competitive firm has the schedule of the costs given below:
Price

Quantity

TR

AR

MR

MC

10

50

10

60

10

70

10

80

10
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d
10

90
(a)
(b)
(c)

15

Complete the table.

What is the formula of profit maximization?
What is the profit maximizing level of output?

2. The graph below shows the cost curves and revenue curve of a perfect competitive
firm.

AC

Cost, revenue
(RM)

MC

32

AVC

26
16

13
8

20

30

64



(a)
(b)

(c)
(d)

What is the value of the equilibrium output?

At the equilibrium level, what is the amount of
i) total revenue?
ii) total cost?
iii) profit or loss?
Will the firm continue to operate in the short run? Why?
What is the value of the price level of the firms shut down point?

SECTION C
1. Explain both the short run and long run positions of a perfect competitive firm.
2. Explain the characteristics of a perfect competition market structure.

!27

_______________________________________________________
TUTORIAL 10 (WEEK 11): Market structure: Monopoly (CHAPTER 16)
Tutorial Exercises:
SECTION A
1.

2.

3.

A pure monopoly is an industry with a single firm that produces a product that has
__________ close substitutes and in which there are __________ barriers to entry.
a.

many; high

b.

many, no

c.

no; high

d.

no, no

The monopolist faces a downward sloping demand curve. This means that the
marginal revenue is
a.

greater than price.

b.

less than price.

c.

equal to price.

d.

equal to average revenue.

The following table is the market of yam.

Quantity (in kg)

Price (in RM per kg) Marginal revenue

Average cost
200
1.07 0.74 0.50 1.50
300
0.92 0.62 0.46 0.75
400
0.80 0.44 0.44 0.70
500
0.66 0.10 0.43 0.65
600
0.50 -0.30 0.50 0.50

Marginal cost

Given the above cost information, a monopoly would charge a price of RM_____
per kg and produce __________ kg of yam.
a.

80 cents; 400
!28

4.

5.

6.

b.

44 cents; 400

c.

50 cents; 600

d.

30 cents; 600

Based on the above table, a profit maximizing monopoly would earn an economic
profit of
a.

RM144

b.

RM38.50

c.

RM40

d.

zero

Which of the following statements about a monopoly is FALSE?

a.

Monopolies have no barriers to entry or exit.

b.

The good produced by a monopoly has no close substitutes.

c.

A monopoly is the only supplier of the good.

d.

A monopoly is a price maker.

The average revenue curve for a monopoly

a.

lies below its demand curve.

b.

coincides with its demand curve.

c.

lies above its demand curve.

d.

is horizontal.

!29

!
For a monopoly, when its profit is maximized, output will be
7.

8.

a.

4 units per year and the price will be $6.

b.

4 units per year and the price will be $4.

c.

6 units per year and the price will be $4.

d.

None of the above answers is correct.

How can a monopoly earn a supernormal profit in the long run?

a.

Because there are close substitutes for the firms product.

b.

Because the firm is protected by barriers to entry.

c.

Because there are many firms in the market.

d.

All of the above are correct.

SECTION B
1. The following is a diagram for a monopoly.

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a) At which level of output will the monopoly maximize its profits?

b) Show and indicate on the diagram the type of profit that this monopoly is
enjoying.
c) If the AC curve is now situated above AR and you are also informed that the AVC
curve is above the price level at point of profit maximization, do you think the
monopoly will continue its operations? (Note: AR, MR and MC curves remain
unchanged)

2. ABC, Incorporated has a local monopoly in the sale of automatic paper towel
dispensers. The table below shows the demand for these towel dispensers at various
prices. The total cost of production of the various levels of output is also shown.
Calculate total revenue and profit for the firm. What level of output maximizes profit?
What price should the firm charge?
Quantity

Price

Quantity

Total
Cost

$100

$80

85

100

70

125

55

155

40

190

25

230
!31

SECTION C
1. List three types of barriers to entry.
2. Explain the disadvantages of monopoly.

!32

________________________________________________________
TUTORIAL 11 (WEEK 12): Market structure: Monopolistic competition and
Oligopoly (CHAPTER 17 & 18)

Tutorial Exercises:
SECTION A
1.

2.

3.

4.

Each of the following is a characteristic of monopolistic competition except:

a.

Many firms

b.

Product differentiation

c.

Mutual interdependence

d.

No barriers to entry

Monopolistic competition differs from perfect competition because in

monopolistic competition
a.

There are few firms

b.

There are no barriers to entry

c.

There are many firms

d.

Firms can differentiate their products

Firms in monopolistic competition make products that are

a.

perfect complements.

b.

close but not perfect complements.

c.

perfect substitutes.

d.

close but not perfect substitutes

For a firm in monopolistic competition, the marginal cost curve intersects the
average cost curve
a.

at the minimum of average cost

!33

5.

6.

7.

b.

to the left of the minimum average cost

c.

to the right of the minimum average cost

d.

at no point

Monopolistic competition differs from perfect competition because, unlike the

perfect competitor, the monopolistically competitive firm
a.

faces a perfectly inelastic demand curve.

b.

can earn positive economic profit in both the short and long runs.

c.

cannot even earn economic profit in the short run.

d.

does not have the same marginal revenue at every output level.

Which of the following statement is true about an oligopoly?

a.

There are few firms which are dependent on one another and selling only
homogenous goods

b.

There are few firms which are not dependent on one another and selling
differentiated goods.

c.

There are few firms which are dependent on one another and selling
homogeneous or differentiated goods

d.

There are so many large firms selling only homogenous goods

Bryan & Thomas Sdn Bhd, an oligopoly will have to

a.

accept the price that has been determined by the market

b.

minimize its profits

c.

produce homogenous goods only in order to be in business

d.

consider its rivals actions when it intends to change the prices of its
goods
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8.

A cartel is a group of firms that

a.

produce differentiated products.

b.

produce products that are complements.

c.

agree to restrict output to increase their profit.

d.

agree to increase output to increase their profit.

SECTION B
1.

Refer to the following diagram for the next 6 questions.

P

MC
AC
22
20
16

MR

AR

Q
90.
a)
b)
c)
d)
e)

f)

2.

100

The profit maximizing price is .

The equilibrium output for the firm is ..
This firm is making an economic profit of ..
In the long run, we could expect to see the MR and AR curves shifting to the
..
In the long run equilibrium the firm produces 70 units of output. Assuming
there is no change in the position of the cost curves, the firms excess capacity
is ..
If at profit maximization point, AR = RM15.55, what is the price of the good?

The firm below sells its output in a monopolistically competitive market. Show the
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d
firm's profit-maximizing level of output. Is the firm earning a profit or a loss?
Show your answer on the graph.
P

AC
MC

D
Q
MR

SECTION C
1.

Describe the characteristics of an oligopoly market.

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