Firms, Competition, Market Power & Profit — Drills · Grade 12 Social Studies
Chapter: Economic Foundations & Market DecisionsWhat these drills covers
By the end of Firms, Competition, Market Power & Profit you should be able to:
- I can calculate revenue, cost, and profit.
- I can explain a civic or economic mechanism using evidence, assumptions, and a qualified conclusion.
4 questions, written answer, each with a worked explanation.
Vocabulary used: revenue, accounting profit, economic profit, market power, marginal cost.
Problem 1
Answer and explanation
Economic analysis includes relevant opportunity costs that may not appear as accounting expenses. In the invented case, subtracting the additional $60 opportunity cost from $80 accounting profit leaves $20. Definitions must avoid double counting.
Problem 2
Answer and explanation
Alternatives differ in substitution, access, switching costs, and entry conditions. Several sellers can coexist with substantial market power. Define the relevant market and examine behavior and constraints, not only names.
Problem 3
Answer and explanation
The extra order adds $20 under the stated revenue, cost, and no-displacement assumptions. It does not establish total profit, cash timing, or every external effect. Those require the firm’s broader records and relevant costs.
Problem 4
Answer and explanation
It identifies features such as concentration or entry conditions. A legal finding also requires the relevant rule, conduct, evidence, and procedure. Do not infer a complete violation or justification solely from size or a category name.