Assume that you make a successful Business Plan regarding Automobile Repair Shop. List several Fixed and Variable costs, Explicit and Implicit costs associated with owning and operating an Automobile business. Elaborate your ideas with hypothetical examples and figures.

Describe at least three non-price competition strategies to differentiate your business and make it profitable.

Important differences exist between perfect competition and monopoly markets. Show your understanding of these differences by listing the following terms under the particular type of market structure. Enter appropriate number only under the specific type of market.

5 marks

1 AR = MR= Price2 Firm is a price Maker3 Franchise barriers

4 Atomistic competition5 Single seller6 No close substitutes

7 Very large number of buyers and sellers 8 Horizontal demand curve

9 Upward sloping total revenue curve10 Firm is a price taker

11 MR curve lies below the AR curve12 Tremendous market power of the seller

Perfect competition Monopoly

Important differences exist between monopolistic competition and oligopoly markets. Show your understanding of these differences by listing the following terms under the particular type of market structure. Enter appropriate number only under the specific type of market.

5 marks

1 Relatively large number of buyers and sellers2 Product differentiation is the key feature

3 Relatively high concentration ratio4 Mutual interdependence

5 Downward sloping elastic demand curve 6 Independent price policy

7 Few large firms8 MR curve lies below the AR curve

9 Homogeneous as well as differentiated products10 Relatively easy entry and exit

11 Beauty salon and barber shops12 Covert collusion

Monopolistic competition Oligopoly

17 Suppose that the pen-making industry is perfectly competitive.Also, suppose that each current firm and any potential firms that might enter the industry all have identical cost curves, with minimum AC = $1.25 per pen.If the market equilibrium price of pens is currently $1.80. What would you expect it to be in the long run? Describe your logic