## management

Q1. You have been hired as an economic consultant by a price-taking (a perfectly competitive) firm that produces T-shirts. The firm already has a factory, so it is operating in the short-run. The price of T-shirt is \$9, the hourly wage is \$24, and each T-shirt requires \$1 worth of material. The following table shows the relationship between the number of workers and output of T-shirts.

 Workers 10 11 12 13 14 15 Output 5 29 41 47 50 52 Labor cost 240 264 288 312 336 360 Material cost \$5 \$29 \$41 \$47 \$50 \$52 Fixed cost \$2 \$2 \$2 \$2 \$2 \$2 Total cost \$247 \$295 \$331 \$361 \$388 \$414 Marginal cost – 48 36 30 27 26 Revenue 45 261 369 423 450 468 MR – 216 108 54 27 18

Note: For answering question-1 (a) and (b) students are required to show all possible calculations.

Q2. See around you and pick up a firm which is either dominating the market or trying to create monopoly.

• (a) Write in brief about the firm chosen and explain how the firm is trying to create a monopoly or dominating the market? (2 points)
• (b) Elaborate your opinion, why we as a society should worry about a firm trying to create a monopoly? (2points)
• (c) Discuss some policy options a government could have to intervene in such market and prevent the monopoly creation. (2points)