1.

Explain how short run and long run price and output of a firm and
industry are determined under perfect competition.
2. (a) Explain the meaning of Monopoly. Discuss the conditions of
equilibrium under Monopoly.

(b) Nixon Thomas Corporation is the sole producer of a particular

type of radiotherapy equipment. The demand curve for its product is
P = (8300 – Q)/2.1 and its total cost function is TC = 2200 + 480Q +
20Q2 where P is price in rupees.
I. What will be the expression for the firm’s Marginal Revenue
curve?
II. What output should be chosen if he wants to maximize his
profit?
III. What is the price to be charged by firm at profit maximizing
output?

3. (a) Distinguish between perfect Competition, monopoly and

monopolistic competition.
(b) R. K. Enterprises is a small firm in the steel office chairs
industry, which is perfectly competitive. The market price of
each chair is Rs.640. The cost function of the firm is TC = 240Q
– 20Q2 + Q3.
I. What is the profit maximizing output?
II. What is the Average Cost when the level of output is 20 units?
III. What is the profit earned by the R. K. Enterprises if the output
sold in the market is 20 units?
IV. Suppose the local government imposes a specific tax of Rs.325
per chair on the R. K. Enterprises What is the profit
maximizing output ?

4. Explain the meaning monopolistic competition? How prices and

profits are determined in monopolistic competition both in the short
run and in the long run?