Question 1
Explain with the use of diagrams where appropriate how perfect competition leads to allocative productive and dynamic efficiency.
Question 2
While firms in both the perfectly competitive structure and the monopolistically competitive structure earn zero economic profit in the long run, it can be said that perfect competition is a more efficient structure than monopolistic competition. Discuss this statement with the use of appropriate diagrams.
Question 3
What is a natural monopoly? (3 marks) 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:
One of the defining charateristics of an oligopoly is non-price compertion. Why is the case and how is this related to game theory scenarios such as the Prisoner's dilemma?
Question 5:
Attempt either Part A or Part B
Part A
Petrol prices recently plummeted; discuss some of the reasons behind this development
OR
Part B
Discuss the pros and cons of deregulation of university education and fees.