Possible Theory of the Firm Question

2007 November

<Paper 1>:

  • Explain the difference between short-run equilibrium and long-run equilibrium in monopolistic competition.
  • “Perfect competition is a more desirable market form than monopolistic competition.” Discuss.

<Paper 2>:

  • With the help of a diagram, explain when a firm should shut down in the short run.
  • Explain the concept of a natural monopoly

2008 May

<Paper 1>:

  • Explain how a firm operating in an oligopolistic market might attempt to increase its market share.
  • Evaluate the view that producers, and not consumers, are the main beneficiaries of oligopolistic market structures.

<Paper 2>:

  • Using at least one diagram, explain the difference between profit maximization and sales revenue maximization as goals of the firm.

2009 May

<Paper 1>:

  • In the theory of the firm, a distinction is made between short-run cost curves and long-run cost curves. Using appropriate cost curve diagrams, explain this distinction.
  • Evaluate the view that greater economic efficiency will always be achieved in perfect competition as compared to monopoly.

<Paper 2>:

  • Explain why prices tend to be relatively stable in a non-collusive oligopoly.

2010 May:

<Paper 2>:

  • With the aid of at least one diagram, explain one way a consumer might gain from the behavior of a monopolist and one way a consumer might lose from the behavior of a monopolist.
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