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Question 1: a. A monopoly occurs when there are barriers

November 27, 2021

Question 1:

a. A monopoly occurs when there are barriers entering the market. List 3 types of these barriers with explanation and example. (1 Mark)

b. Fill the following table for a monopolist firm. (1 Mark)

Marginal revenue

Total revenue

Output

Price

$100

$85

$70

$55

$40

$25

c. Draw the demand curve and the marginal revenue curve for the above table. And explain the relationship between the marginal revenue and the price. (1 Mark)

Question 2.

a. Explain the effects of low price-guarantee on the price. (1 Mark)

b. Give reasons, when average cost increases as the total output increases for an increasing cost industry. (1 Mark)

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