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    Eco Question Bank From Chapter 6 and Chapter 7

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    Aditya Shah
    This document contains 31 questions related to market structures and firm behavior from chapters 6 and 7 of an economics textbook. The questions cover a range of topics including monopoly, oligopoly, monopolistic competition, and perfect competition. They ask students to explain key concepts, use diagrams, and evaluate statements about market efficiency and the desirability of different market structures.

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    Eco Question Bank From Chapter 6 and Chapter 7

    Uploaded by

    Aditya Shah
    183 views5 pages
    This document contains 31 questions related to market structures and firm behavior from chapters 6 and 7 of an economics textbook. The questions cover a range of topics including monopoly, oligopoly, monopolistic competition, and perfect competition. They ask students to explain key concepts, use diagrams, and evaluate statements about market efficiency and the desirability of different market structures.

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    Eco Question Bank from Chapter 6 and Chapter 7.docx

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    This document contains 31 questions related to market structures and firm behavior from chapters 6 and 7 of an economics textbook. The questions cover a range of topics including monopoly, oligopoly, monopolistic competition, and perfect competition. They ask students to explain key concepts, use diagrams, and evaluate statements about market efficiency and the desirability of different market structures.

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    © All Rights Reserved
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    183 views5 pages

    Eco Question Bank From Chapter 6 and Chapter 7

    Uploaded by

    Aditya Shah
    This document contains 31 questions related to market structures and firm behavior from chapters 6 and 7 of an economics textbook. The questions cover a range of topics including monopoly, oligopoly, monopolistic competition, and perfect competition. They ask students to explain key concepts, use diagrams, and evaluate statements about market efficiency and the desirability of different market structures.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Question Bank from Chapter 6 and Chapter 7

    May 1993 to November 2016

    Question 1:

    a. Explain the main features of an oligopolistic market. [10]

    Question 2:

    a. Explain the term ‘natural monopolies’ and why are they considered a danger if left
    unregulated. [10]

    Question 3:

    a. ‘Monopoly price is higher and output smaller than is socially ideal. The public is a
    victim.’ [Galbraith, 1974]. Explain the economic reasoning behind the statement that
    “monopoly price is higher and output smaller than is socially ideal. [10]
    b. To what extent do you agree that the public is always the victim of monopoly? [15]

    Question 4:

    a. Using suitable diagrams, explain why there is likely to be an absence of long run
    economic profits in perfect competition. [10]
    b. To what extent might consumers benefit from increased competition between firms?
    [15]

    Question 5:

    a. How does a monopoly maintain supernormal (or abnormal) profit in the long run? [10] b.
    Discuss whether monopoly is always undesirable. [15]

    b. Discuss and evaluate the proposition that perfect competition is a more efficient market
    structure than monopoly. [15]

    Question 6:

    a. Explain how monopoly power might arise. [10]

    b. Evaluate the extent to which governments should seek to control the growth of monopoly
    power. [15]

    Question 7:

    a. Explain how a monopolist may be able to earn supernormal (abnormal) profits in the
    long run
    [10]
    b. ‘Production by a monopolist will always be against the interests of consumers’.
    Discuss. [15]
    Question 8:

    a. Explain how profit is determined in perfect competition. [10]

    b. ‘Whatever the type of market structure, profit maximization will always be the only goal of
    firms’. Discuss. [15]

    Question 9:

    a. Explain the differences between monopolistic competition and oligopoly as market


    structures [10]
    b. Discuss the differences between a collusive and a non-collusive oligopoly. [15]

    Question 10:

    a. Explain the necessary conditions for price discrimination to take place. [10]

    b. Discuss the advantages and disadvantages of price discrimination for consumers and
    producers. [15]

    Question 11:

    a. Explain how barriers to entry may affect market structure. [10]

    b. Evaluate the view that monopoly is an undesirable type of market structure. [15]

    Question 12:

    a. Explain the difference between short run equilibrium and long run equilibrium in
    monopolistic competition. [10]
    b. ‘Perfect competition is a more desirable market form than monopolistic competition’.
    Discuss. [15]

    Question 13:

    a. Explain how a firm operating in an oligopolistic market might attempt to increase its
    market share. [10]
    b. b. Evaluate the view that producers, and not consumers, are the main beneficiaries of
    oligopolistic market structures. [15]

    Question 14:

    a. In the theory of the firm, a distinction is made between short run cost curves and long
    run cost curves. Using appropriate cost curve diagrams, explain this distinction. [10]
    b. Evaluate the view that greater economic efficiency will always be achieved in perfect
    competition as compared to monopoly. [15]

    Question 15:
    a. Explain why a firm may practice price discrimination and the necessary conditions for
    it to take place. [10]
    b. ‘Although a firm may pursue a range of goals, economists usually assume that profit
    maximization is the main goal’. Discuss this statement. [15]

    Question 16:

    a. Using an appropriate diagram, explain how a monopolist might be able to make


    supernormal (abnormal) profits in the short run, and why these profits might continue
    to be earned in the long run. [10]
    b. Evaluate the view that monopolistic competition is a more economically desirable
    market form than monopoly. [15]

    Question 17:

    a. Using at least one diagram, explain why a firm in perfect competition might only be
    able to make supernormal (abnormal) profits in the short run and not in the long run.
    [10]
    b. Evaluate the view that perfect competition is a more desirable market form than
    oligopoly. [15]

    Question 18:

    a. Using an appropriate diagram, explain how a monopolist might be able to make


    supernormal profits in the short run, and why these profits might continue to be
    earned in the long run. [10]
    b. Evaluate the view that monopolistic competition is a more economically desirable
    market form than monopoly. [15]

    Question 19:

    a. Explain the economic factors which may encourage the formation of a monopoly. [10]

    b. Evaluate the view that natural monopoly is a more desirable market structure than perfect
    competition. [15]

    Question 20:

    a. Using at least one diagram, explain why a firm in perfect competition might only be
    able to make supernormal (abnormal) profits in the short-run and not in the long-run.
    [10]
    b. Evaluate the view that perfect competition is a more desirable market form than
    oligopoly. [15]

    Question 21:

    a. Explain why, in markets dominated by a few firms, prices may remain relatively stable.
    [10]
    b. ‘An industry with a larger number of firms will experience lower prices and greater
    efficiency than an industry with a smaller number of firms’. Evaluate this view. [15]

    Question 22:

    a. Explain why firms in monopolistic competition can make economic (abnormal)


    profits only in the short run. [10]
    b. Compare and contrast the market structures on monopoly and monopolistic
    competition. [10]

    Question 23:

    a. Explain why a monopoly can earn supernormal (abnormal) profits in the long-run.
    [10]
    b. b. Evaluate the reasons why a government might allow a competitor into an industry
    that was previously a monopoly. [15]

    Question 24:

    a. Using diagrams, explain why a perfectly competitive firm can make economic
    (abnormal) profits only in the short run. [10]
    b. Discuss the consequences of a perfectly competitive industry becoming a monopoly.
    [15]

    Question 25:

    a. Using a diagram, explain why firms in monopolistic competition are neither


    allocatively nor productively efficient. [10]
    b. Examine the view that the market for food is more beneficial to consumers if
    dominated by a monopoly retailer (supermarket) rather than by a large number of
    small shops operating under monopolistic competition. [15]

    Question 26:

    a. Explain why firms might wish to collude. [10]

    b. Discuss the view that governments should always try to prevent a monopoly from
    occurring in a market. [15]

    Question 27:

    a. Explain why prices tend to remain stable in oligopolistic markets. [10]

    b. Oligopolists often possess too much monopoly power. Evaluate whether governments
    should intervene in oligopolistic markets. [15]

    Question 28:

    a. Explain two possible government responses to the abuse of monopoly power. [10]
    b. Evaluate the view that monopolies, despite their inefficiencies, may often be considered
    desirable. [15]

    Question 29:

    a. Explain why a firm in monopolistic competition will make only normal profit in the
    long run.
    [10]
    b. Evaluate the view that monopolistic competition is a more efficient market structure
    than monopoly. [15]

    Question 30:

    a. Explain why firms may not always pursue the goal of profit maximization . [10]

    b. In monopoly, economic (abnormal) profit can be earned in both the short run and the long
    run. Examine the role of barriers to entry in earning economic profit. [15]

    Question 31:

    a. Explain the conditions necessary for firms in oligopolistic markets to engage in price
    discrimination.
    b. Discuss whether producers in oligopolistic markets should compete or collude.

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