QUESTION $18$

$(4$ Marks$)$

If negative economic profits are being made in a perfectly competitive market, what two changes are likely to occur?

a$.$ The market supply curve will shift to the left and each firms' production quantity will fall.

b$.$ The market supply curve will shift to the right and each firms' production quantity will rise.

c$.$ The market supply curve will shift to the left and each firms' production quantity will rise.

d$.$ The market supply curve will shift to the right and each firms' production quantity will fall.

QUESTION $19$

$(4$ Marks$)$

Consider the graphs above. Suppose that at price P $1,$ motorcycle manufacturers are making positive economic profits. Assuming the market in motorcycles is perfectly competitive, which of the following will occur in the long run?

a$.$ The supply curve will shift to the right.

b$.$ The demand curve will shift to the right.

c$.$ Price will rise.

d$.$ Price will remain constant.

QUESTION $20$

$(4$ Marks$)$

Bertha's Bath Supplies produces packets of bath salts, which are sold for R$5$ each. Bertha's Bath Supplies is a price$-$taking firm. Total revenue and total cost curves for the firm are shown in the graph below.

Which of the following statements is true regarding the graph shown above?

a$.$ Profits are maximized at point E $.$

b$.$ The distance from B to C represents profit earned.

c$.$ The distance from B to D represents profit earned.

d$.$ The distance from C to D represents profit earned.J