eco1_MT3_practice

eco1_MT3_practice - PART TWO ( /30) Question 1 (10 marks)...

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Unformatted text preview: PART TWO ( /30) Question 1 (10 marks) Refer to the Figure below and answer all questions. The Figure refers to production decisions by two firms, Coke and Pepsi $5 $5 $5 $5 Figure 2-1 1) What type of market is represented in Figure 2-1? (1) 2) What is the dominant strategy of each firm in Figure 2-1? (2) 3) What will be the only stable equilibrium for Figure 2-1, and why? (2) 4) Suppose the payoff matrix looks like Figure 2-1b instead, and Coke moves first. $5 $5 $5 $5 Figure 2-1b Draw the game below. Identify the equilibrium outcome if Coke moves first (5) 1 Question 3 (10 marks) Refer to the Figure below Quantity Price MR ATC MC AR Q 1 Q 5 Q 4 Q 2 Q 3 P 5 P 4 P 3 P 2 P 1 P 6 Figure 2-3 1) Is the market in Figure 2-3 perfectly competitive or monopolistically competitive? Why? (2) 2) What is the profit-maximising quantity of production, and why? (2) 3) What is the profit-maximising price charged for the quantity in part 2), and why? (2) 4) Is this market efficient? Why or why not? (1) 5) Are the points of efficiency in this market feasible or attainable? Why or why not? (3) 2 SECTION TWO (60 minutes) Answer any THREE of the questions in this section. Question One Economic discrimination occurs when a person is paid lower wages, or excluded from an occupation altogether, on the basis of erstwhile irrelevant characteristics such as gender or ethnicity. 1) Assuming efficient markets (including for the factors of production, e.g. labour), provide an explanation for why wage discrimination against women should not exist...
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eco1_MT3_practice - PART TWO ( /30) Question 1 (10 marks)...

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