Top Notch Communications Ltd is a small online technology retailer on EBay.

Top Notch Communications Ltd

The assessment comprises of sections A and B.

 Section A is a microeconomics question, and constitutes 25% of the mark.
 Section B is a macroeconomics question, and constitutes 25% of the total
assessment mark.

 You are required to answer both questions.

SECTION A: MICROECONOMICS.

 

Top Notch Communications Ltd is a small online technology retailer on EBay. The cost of
setting up the online store is relatively small, and hence faces 1000s of competitors selling
identical products. The market is very competitive, with price being the main tool of
competition. As a result, Top Notch Communications Ltd has no influence on the prices it.
1. The following data represents demand and supply schedules for smart watches on
EBay’s market platform over a period of time.
Quantity Demanded Quantity Supplied Price (£)
90 50 10.00
80 60 15.00
70 70 20.00
60 80 25.00
50 90 30.00
a. Plot the full demand and supply schedules for Top Notch’s Smart Watch sales,
identifying the market equilibrium price.
b. How would Top Notch’s firm demand schedule differ from the market demand
schedule for the smart watches.
c. Given that Top Notches has no influence over the market price, explains using the
demand and supply schedule, the implications of raising the price by £5, over the
equilibrium price.
Top Notch’s total cost of producing smart watches is also given below.
Quantity Total Cost (£)
0 5.00
1 7.50
2 9.00
3 12.00
4 20.00
5 31.00
6 46.00
7 66.00
8 88.00
(d) Using all the information given in the table above, calculate the Top Notch’s marginal
revenue, marginal cost and average total cost and draw the marginal revenue,
marginal cost and average total cost curves.
SECTION B: MACROECONOMICS.
1. Distinguish between a Pure Market Economy and a Centrally Planned Economy.
Discuss how both forms of economies deal with…
(a) The problems of scarcity and choice.
(b) The price mechanism.
(c) International Trade.
 (Maximum word limit: 750)
 You are expected to do research, and provide academic references (articles
and books).

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