1. One of the interventions that the government may do is to apply price ceilings.

For example, at a time

of crises or pandemic, the government may impose a ceiling on how much they can charge a certain
good that may be deemed a necessity.

Conversely, a price floor may also be placed to protect the producers of a certain good or product. By
establishing a minimum price, a government seeks to promote the production of the good or service and
ensure that the producers have sufficient resources to go about their work [ CITATION Gov \l 1033 ].

Taxation is also another intervention that the government may use. Taxes can influence a person’s
financial behavior, such as to limit and discourage use of a certain product. For example, a sin-tax is
placed on products such as alcohol, and cigarretes.

2. The features of perfect competition include the following:

 There is a large amount of both buyers and sellers in the market. Both buyers and sellers
compete among themselves, and because of the number, they do not influence the demand or
supply in the market [ CITATION htt1 \l 1033 ]
 The product is also essentially identical in a perfect competition. Each product from any firm
could be a perfect substitute for each other, and because of this, the price elasticity of demand
for a firm’s product is infinite [ CITATION Man \l 1033 ]
 Firms are free to enter and exit at any time. No restrictions are placed on new firms that would
want to enter the market, or existing firms that would like to exit from it.
 Both firms and consumers have perfect knowledge of the market. Knowledge is freely available
to everyone involved in the market, meaning that there is minimal risk involved.
 Products are transported in a cheap and efficient manner. Uniform prices would not be possible
if the commodity cannot be quickly transported.
 Buyers don’t have no preference of whom to buy from, and sellers also have no preference
between buyers.
3.

A firm should stop hiring more workers if the wage rate is higher than the value of marginal
product of labor. In instances like this, the labor cost of adding in more employees would
outweigh the value of the additional products produced by the additional employees.

Characteristics of a market form include the following:

 Number of firms, which is the number of firms competing in a specific market.

 Degree of concentration, which refers to the extended of the market share held by top
firms [ CITATION Irf19 \l 1033 ].
 Nature of Product and its Substitutes, which determines how irreplaceable or how
valuable a certain product is, which affects the firm’s ability to charge higher or lower
than its market price.
 Entry and Exit Barriers, which are restrictions that allow firms to enter or exit the
market.

4. Cost, as defined by Merriam-Webster, is the amount or equivalent paid or charged for something. The
following are the different types of cost:

 Fixed and variable costs. The main difference between the two is that fixed costs do not change
regardless of the amount of the output, while variable cost does. For example, rent will not vary
regardless of how little or how much product you produce, while materials will. Hence, rent is a
fixed cost, and materials are a variable cost.
 Direct and indirect costs can also be attributed to production of output. Direct costs can be
likened to variable costs in such a way that they affect the output directly, such as materials,
 power, and direct labor. Indirect costs can be parallel to fixed costs as they aren’t directly
related to the output, such as rent.
 Operating costs are expenses associated with day-to-day business activities but are not traced
back to one product [ CITATION Chr20 \l 1033 ].
 Opportunity costs arises when a decision is made over another. For example, if a firm decides to
rent an equipment rather than purchase said equipment, opportunity cost would be the
difference between the total cost of renting the equipment, rather than buying said equipment.
 Sunk costs are money already spent and lost. As long as the money is spent, it is counted as a
sunk cost.

5. Supply is defined as the total amount of goods or service available to consumers, while demand is the
willingness of a consumer to pay for a good or service.

The determinants of demand include the price of a good or service, the income of buyers, the prices of
other related goods or service, the consumer’s taste or preference, and as well as their expectations
[ CITATION Kim20 \l 1033 ].

The determinants of supply include the production cost, technology, number of sellers, and expectations
for future prices [ CITATION DET \l 1033 ]
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