a) Explain briefly THREE (3) characteristics of monopoly. (6 markah/marks)

b) You are a producer in monopoly industry. Your demand (D), total revenue (TR), marginal revenue (MR) and total cost (TC) functions are given as follows:

P = 60 - 0.5Q TR = 60Q - 0.5Q2 MR = 60 - Q TC = 4Q

i) Calculate the equilibrium quantity and price that maximizes your profit. (4 markah/marks)

ii) Calculate total profit that you gain at that equilibrium quantity and price. (4 markah/marks)

c.Using an appropriate diagram, illustrates the existence of social cost in monopoly market. (6 markah/marks)

d.Using an appropriate diagram, explain the term "natural" in relation to the existence of a natural monopoly. (5 markah/marks)

2 SOALAN DUA / QUESTION TWO (25 MARKAH / MARKS)

a) Explain TWO (2) reasons firm in the monopolistic competition market has lower ability to control prices as compared to a monopoly. (6 markah/marks)

b)Explain how price or output is determined by a firm in oligopolistic market. (4 markah/marks)

c) Assume that the market for pizza is monopolistically competitive and there are already a few other similar shops scattered around the campus. Describe TWO (2) methods of differentiating your own pizza from others. (4 markah/marks)

d) Using an appropriate diagram, explain whether the output produced by monopolistic competition firms efficient in the long run. (6 markah/marks)

e) Explain TWO (2) differences between monopolistic competition and perfect competition market. (5 markah/marks)