Analytical Integrated Microeconomics Assessment Assignment Sample

Introduction - Analytical Integrated Microeconomics Assessment

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Question 1

Part 1

(a) Variable & Fixed inputs

1. Machine of frozen yoghurt
2. Refrigerators

These two are the inputs which are fixed and do not differentiate with the produced quantity of total output.

1. Cups
2. Frozen yoghurt mix
3. Labourers
4. Sprinkle toppings

These are some of the inputs which are variable and may change in quantity if the produced quantity of the output changes.

(b) Calculation of marginal product

(c)

When the production increased, Cecilia started adding more workers to run the production. When the marginal product started diminishing the law of DMR also started occurring. At the point where he employed 4 workers for the production of 250 Frozen yoghurt cups, the law of diminishing marginal return has occurred.

(d)

The short run is the only place where DMR law exists when a few inputs of the organisation are fixed (Anderson et al. 2020). Frappy Frozen Yogurt holds a limited area of space and less equipment and if the organisation keeps hiring more employees, it will be difficult for them to operate with limited equipment and work in a limited area of space. Therefore, the ratio related to the employee and overall capital of the organisation will not be ideal enough and output increase may start decreasing. 

Part 2

(a& b) Calculation of variable, total costs and marginal cost per cup

(c)

Graph 1: Cost curve

(Source: Self-created)

(d)

Graph 2: Marginal product

(Source: Self-created)

Graph 3: Marginal cost per cup

(Source: Self-created)

(e)

The relationship in both the marginal cos for each cup and marginal product has been made which is clear in the above graph a downward curve is experienced in both the graphs. However, this relationship only forms in the short run and not in the long run.

Question 2

(a) Two market structure

Perfect competitive

The market of perfect competition is that market where a huge number of sellers in small industries compete with each other. In this market, the products and commodities are identical and the restrictions of entering into the market along with an exit is zero which means any individual can buy or sell their items in this market freely.

In the market of perfect competition, the output along with market price is determined according to the supply in the market and demand of the customers (Tanaka, 2020). Therefore, it can be said that the organisation is required to remain equilibrium at a stage of price where the demand of quantity is equal to the overall quantity supplied. 

Monopolistic competitive

The monopolistic competitive market is where a large number of traders along with numerous buyers enter the market and the seller sells similar yet differentiated items and commodities to the consumers. Also in this market, because the commodities are differentiated the seller charges the individuals a higher amount for those commodities (Behrens et al. 2020).

In the market of monopolistic competition, the price along with the output are determined by the organisation of their own commodities and for such reason it experiences a curve of demand which is sloping downward. Therefore, saying that demand elasticity increases if the product differentiation in the market decreases would not be wrong.