a. How might a heavy advertising campaign by an incumbent firm raise barriers to entry? Illustrate your answer by drawing possible advertising response functions for an incumbent and an entrant. ( 20 marks)

b. Explain the cost-saving motives for vertical integration.( 20 marks)

c. Two methods of measuring economies of scale.( 40 marks)

d. Factors that caused firms in Small and Medium Industry to operate at the sub-optimal level.( 20 marks)