Econs Case Study

To prepare for Econs case study, and to round up two years of Econs essays, here are some real life examples and practice questions. I've done some essay outline, but in no way do I claim responsibility for the quality of the answers, and I take no liability should they be cited in examinations.

1) Apply the Law of Diminishing Marginal Returns to Economics.
-> Fixed factor: Time for paper (2h15min) Variable factors: Time spent mugging, amount of effort put in.
-> As more variable factors are applied to A level Econs paper, they inevitably experience a deficit in time, and there is a bottleneck, resulting in squeezing of scarce resources (time). Output and quality of answers increase less than proportionately as more variable factors are added.
-> There is diminishing marginal returns.
-> In the long run, Econs A levels will be over, and anyone who wishes to do practice econs papers will experience no lack of time, as the factor is now variable.

2) Explain, with reference to the motives of firms, why not all firms pursue a profit-maximising objective.
-> Example: West United FC increased prices from $1.20 /hr to $2/hr. This is a highly prohibitive price, and is hardly competitive. Yet the market structure for such shops is monopolistic competition, due to (blah blah...)
-> the PED is relatively inelastic, but it is insufficient to explain the price hike.
-> Conclude: the firm does not really wish to maximise profits. Once the startup cost is covered, the owners of the firm are only interested in having revenue cover AVC, for the daily operation of the shop. The other objective of the owners is to have a quiet shop and lots of space to engage in cyberslacking in a virtual world. Rawr.
-> Reason why they don't just set up a small shop in the first place, with only 10 computers (for e.g.) is due to the need to exploit Economies of Scale. Such a small shop is unlikely to attract customers, who frequently patronise such shops usually in large groups.
-> Reason why they choose to set up this type of shop. Beyond the high startup cost, running of the shop requires minimum effort and allows much time for other activities.
etc etc.