Q1. Firms in oligopoly must
constantly think in terms of how other firms in the industry will react
to whatever they do. Why do they have to do this? Why is it that firms
in perfect competition and in monopoly don’t have to worry about how
other firms will react? (5 Marks)
Q2. Governments are frequently
tempted to introduce price ceilings in markets. Use an example to
explain why this is not such a good idea, at least when markets are
competitive. Give some ideas as to what the government could do instead
in order to help consumers in these markets. (5 Marks)
Q3. If
perfectly competitive firms are price takers, and monopolistic,
monopolistic competitive, and oligopolistic firms are price searchers,
then it follows that three times as many firms in the real world are
price searchers than are price takers. Do you agree or disagree? Explain
your answer. (5 Marks)
Q4. Critically analyze the following statement with views of your own:
“There
is no substitute for an airline pilot: Someone has to fly the plane.
Therefore, an increase in the wage of airline pilots will not change the
number of pilots used by the airlines.”(5 Marks)
Note: For all your answers support your views/opinions with at least two to three scholarly references, and a word count of 400-500 words for each answer.
Learning Resource:
Chapters 7, 8 & 10 of the Text Book O’Sullivan, A., Sheffrin, S.
M., & Perez, S.J. (2014).Survey of Economics: Principles,
Applications, and Tools. (6th).Upper Saddle River, NJ:
Pearson Education. Print version: ISBN-10: 0-13-294885-0 or ISBN-13:
978-0-13-294885-2.Digital version: ISBN-13:978-0-13-13-9370-7.
