Article 2: Internet increases competition in global marketplace The rise of the Internet as a global means of communication has led many commentators to argue that the ability of internet users to connect with business and consumers anywhere in the world as easily as they might communicate with their next-door neighbor means that the potential for international competition between firms has increases enormously. In other words, the internet is increasing global competition and promoting the efficiency gains that are an acknowledged income of competitive markets. In a paper to an 'Electronic Consumer' conference in NZ, the former deputy chairperson of the ACCC, Allan Asher drew the following implications for global competition from the internet revolution. "It seems almost certain that online markets and other forms ofelectronic commerce will expand rapidly to the point where a truly global retail marketplace will emerge. Already some industries are feeling the effects of these new technologies, especially those which are essentially information and booking services.... This global electronic market will present both tremendous opportunities as well as some very real challenge rs for regulators, industry and consumers.... Indeed, electronic commerce and online commerce especially has the potential to close the gap which so often exists between idealized economic models of perfect competition and the imperfect way that many markets actually work in practice....online commerce can do this by increasing competition amongst suppliers and by decreasing the opportunity and transaction costs faced by buyers in gathering and processing information.... Electronic commerce has the potential to deliver significant gains to consumers in terms of price, quality and service through increased competition. This is likely to happen for two interrelated reasons lower barriers to entry and increased numbers of suppliers competing in product markets. Traditionally, local or geographic monopolies have persisted because of high barriers to entry linked to large establishment (fixed) costs in such areas as physical infrastructure, distribution networks and advertising. The internet and to a lesser extent other electronic service delivery channels, lower barriers to entry significantly for providers of many products and services Since the internet allows newer and small players to promote and sell products in direct competition with larger players, it will increase the number of competitors in the market. Consumers can now tap into a global market and are not bound to a restricted number of physically nearby suppliers improved choice, price, quality should result. a. How does the author of the above material see the internet changing the extent to which markets conform to the three assumptions of the perfectly competitive market structure? 3marks b. Why do you think the author welcomes to the possibility that the internet will close the gap between market structures observed in the real world and the idealized model of perfect competition? Zmarks 14. Define natural monopoly? Name one monopoly in Samoa 2marks 15. Explain why Oligopolistic market decisions are more difficult compare to other market structures? Use a local example to support your explanation. 2marks 16. List and explain any THREE strategies a furniture firm in monopolistic market uses to differentiate its products? 3marks 17. Explain some of the gains and challenges from collusions under oligopoly. State an incentive to cheat a cartel agreement by a member 3 marks 18. Explain any of the TWO requirements a firm must adhere to practice price discrimination. 2marks 19. Define mutual interdependence and its relevance to the oligopoly. 2marks13. Different between Accounting and Economic Profit. Use the data below to prepare a Statement of Accounting profit vs. Economic profit. [Use a blank page to write your answer]4 marks i. Total Revenue 500000 ii. Explicit Costs: wages and salaries 400000 raw materials 50000 interest on loan 10000 other payments 10000 iii. Implicit Costs: foregone salary 70000 foregone rent 10000 foregone interest 500011. Suppose there's a firm that manufactures umbrellas. The table on the following page displays some of its cost structure. [Show your work and calculations] Quantity of umbrellas a. What is the total fixed cost of producing 2 umbrellas? 2marks b. What is the marginal cost of the sixth umbrella? Zmarks c. Calculate the average fixed cost of the fifth unit. Show your work. 2marks :1. Calculate the total variable cost and the average variable cost of producing 8 units. Show your work. 2 marks 12. Explain why the average total cost curve and the average variable cost curve move closer together as output expands. 2marks 13. Different between Accounting and Economic Profit. Use the data below to prepare a Statement of Accounting profit vs. Economic profit. [Use a blank page to write your onswer]4 marks i. Total Revenue 500000 ii. Explicit Costs: wages and salaries 400000 raw materials 50000 interest on loan 10000 other payments 10000 iii. Implicit Costs