Question
(a) One characteristic of perfect competition is that all the firms sell a homogenous product. The firm also cannot fix its own price. (i) What
(a) One characteristic of perfect competition is that all the firms sell a homogenous product. The firm also cannot fix its own price.
(i) What is meant by the term "homogenous product?" Give examples of goods and services which can be classified as homogeneous. (4 marks)
(ii) Why is the perfectly competitive firm a price taker? Discuss. (6 marks)
(b) Explain the characteristic of interdependence in an oligopoly market structure and give ONE (1) example. (4 marks)
(c) Explain the TWO (2) following methods of product or service differentiation typically employed by monopolistic firms
(i) Large-scale New Product Innovation (3 marks)
(ii) Advertising (3 marks)
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
