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ECON 100 Tutorial 10

ECON 100 Tutorial 10. Rob Pryce www.robpryce.co.uk/teaching r.pryce@lancaster.ac.uk. Question 1. From the list of points below select those which distinguish a monopolistically competitive industry from a perfectly competitive industry.

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ECON 100 Tutorial 10

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  1. ECON 100Tutorial 10 Rob Pryce www.robpryce.co.uk/teaching r.pryce@lancaster.ac.uk

  2. Question 1 From the list of points below select those which distinguish a monopolistically competitive industry from a perfectly competitive industry. (a) There are no barriers to the entry of new firms into the market. (b) Firms in the industry produce differentiated products. (c) The industry is characterised by a mass of sellers, each with a small market share. (d) A downward sloping demand curve means the firm has some control over the product's price. (e) In the long run only normal profits will be earned. (f) Advertising plays a key role in bringing the product to the attention of the consumer.

  3. MC ATC Demand Profit MR Question 2 – Short Run Profits Price Price Average Cost Quantity 0 Profit Maximising Quantity

  4. MC ATC Demand MR Question 2 – Long Run Price P = ATC 0 Quantity Profit-Maximising Quantity

  5. Question 3 Classify each of the following markets as highly contestable, moderately contestable, slightly contestable or non-contestable. If it depends on the circumstances, explain in what way. a. Satellite Broadcasting b. Hospital Cleaning Services c. Banking on Campus d. Piped Gas Supply e. Parcel Delivery f. Siting for the Olympic Games g. Bus Service in Lancaster (ANSWERS ON NEXT SLIDE)

  6. Question 3

  7. Question 3 (cont’d)

  8. And that’s it (for now)! Merry Christmas Have a good break See you in the New Year Any questions, feel free to email me r.pryce@lancaster.ac.uk

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