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Question 1:
(a) Describe how asymmetric information influences the price system and resource allocation. Provide examples to support your answer.
(b) Managerial decision-making involves uncertainty and risk. Analyse the possible behaviours of managers towards risk.
Question 2:
(a) Distinguish between income elasticity, price elasticity and cross elasticity of demand.
(b) Show how the manufacturer of mobile phones can use the concept of elasticity in pricing decision.
Question 3:
(a) Compare and contrast the profit maximizing behaviour and output decision of the perfectly competitive firm and the monopolist in the long run.
(b) Explain three different models of oligopoly. Support your answer with appropriate examples.
What is the theory of the firm A firm can be considered an amalgamation of people, financial and physical resources and a variety of information. Firms exist as they perform us
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asumption and limitation of increemrntal,oppurtunity cost
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The production function of a small shop that frames pictures is Q = 5 √ LK where Q is the number of pictures framed per day, L is labor hours and K is the machine hours.
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