1-What are the main two differences between the Free market and Command Market? (2 Marks)

a.

b.

2-Calculate the values in this table (5 Marks)

Quantity

Price

FC

TVC

TC

MC

TR

MR

AFC

AVC

ATC

1

30

10

10

X

X

2

25

15

3

20

18

3-With a 30% change in a product price, the demand for the product changes by 60%. What is the price elasticity of demand for this product? (Show Formula) (3 Marks)

4-Define the following terms: (7 Marks)

a.Law of demand

b.Law of diminishing marginal return

c.Equilibrium Price

5-Using the concept of economies of scale, explain why it is difficult for smaller companies to compete with larger companies. Support your answer with a relevant diagram showing the concept of economies of scale. (3 Marks)

6-With similar PPC curves in 2015, two countries are spending their resources on two different types of products. One country is spending more on consumer goods, and the other one is spending more on capital goods. Answer the following questions: (10 Marks)

a.What does PPC stand for? ____________________________

b.What is the difference between consumer good and capital good?

c.PPC of which county shifts faster? Support your answer with enough explanation and relevant diagrams.

7-Why is MC curve U shape? Explain with the support of relevant diagrams. (2 Marks)

8-MC and AVC curves cross each other at the minimum point of AVC. Why? (2 Marks)

9-What happens to the price and quantity of petrol in the market when electric cars become more popular? Explain AND draw supply and demand curves to support your answer. (6 Marks)