Posted: December 1st, 2013
Perfect competition
Question 1
Explain with the use of diagrams where appropriate how
perfect competition leads to allocative,
productive and dynamic efficiency.
Question 2
Illustrate with the use of diagrams how the
profit maximising price and output for firms in a
monopolistic competitive market structure is determined.
Does the fact that
monopolistically competitive markets do not achieve allocative or productive
efficiency mean that there is a significant loss in economic well-being to society in these markets?
Question 3
What is a natural monopoly? If a firm is a natural monopoly, illustrate with the use of diagrams why is
it is necessary to have the price set by a regulatory authority rather than by the market.
Question 4:
(a) Explain with the use of examples the concept of positive and negative extemalities.
(b) Illustrate with the use of diagrams how government intervention can correct them
Question 5:
i.e. why has there been reform in this industry or market?
(b) How successful do you think these reform measures were and say why referring to
some data or research that has been performed.