Essay Practice

Question 1

Eva of SR shutdown pt

Answer 1

Can cross subsidise w other services

Eg motorway service charge for parking

Question 2

Eva of D fall, as a result of cheaper P of sub

Answer 2

Fall in profits is temporary, price of sub may rise

Question 3

Eva of Eos

Answer 3

1 will they produce at min efficient scale? No bc produce at MC=MR
2 diseos e.g. Financial doesn’t apply due to debts

Question 4

What can increase profit

Answer 4

Higher rev
Lower cost
Collusion

Question 5

Eva for tradable permits

Answer 5

High monitor costs
Ineffective if too many
International

Question 6

Eva for NMW improve std

Answer 6

The unemployed lose out

Question 7

Eva for non-p compe rather than p compe in oligopoly

Answer 7

Depend on contestable

Question 8

Eva for x ineff

Answer 8

Contestable

Question 9

Pts for contestable

Answer 9

Barriers to entry
Sunk costs
Ability to make profits

Question 10

Eva for business growth

Answer 10

Lack of synergy
Diseos
Niche
Owners objective
Lack access to finance
Régulation

Question 11

AN sunk costs

Answer 11

Ad

For steel plants, also FC

Question 12

Eva of Kinked d curve

Answer 12

Rigidity maybe due to the cost associated with modifying p list

Question 13

Condition of collusion

Answer 13

High bte so no fear of disruption by new firms

Question 14

Eva for limit pricing

Answer 14

Mag of bte

Question 15

Eva price war

Answer 15

LR price rise

Question 16

Eva contestable and cons welfare/ allo effi

Answer 16

MC low but FC high, P=MC at high outputs
Consumer loyalty (utility
Firms put up artificial barriers
Bte innocent: eos