Question

Question TWO (CLO2)( 5 marks)

Students are required to select any firm having characters of Monopoly. Discuss the basic characteristics of monopoly and profit maximization condition. ( support with diagram)

Question THREE (CLO4)(5+5=10marks)

The two markets such as perfect completion and the monopolistic competition are having some similarities and some differences. Analyze these characters. ( support with example and diagram)

Answer 1

AT&T enjoyed monopoly in 1970 where it was sole player of wored telephone market afterwhich Anti Trust regulatory discarded it based on Sherman Act and thus allowed more players to participate in sector. Monopoly is driven by large sizable profits and high entry barriers and single firm woth highest market share. Profit maximizing occurs when marginal cost equivalent to marginal revenue.

Perfect competition is characterised by higher number of firms, low entry barriers, lower market shares and low profitability. Monopolistically competitive market is characterised by feee entry and exit, large sellers, differentiation of products.

The simility between both is that both have large numbers of firms.

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