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4. (a) (i) State and explain two economic characteristics of enterprise as a factor of production. (ii) Explain the importance of profits in a market economy. (30) (b) Distinguish between the terms capital and investment as used by economists. Discuss the case for and against the Government investing in Ireland's railways. (30) (c) (i) State and explain the three motives put forward by John Maynard Keynes for holding assets in the form of cash. (ii) Outline one main influence on each motive. (15) [75 marks]1. (a) The table below refers to the market data for 4G High Definition Televisions (TVs). Price (() Quantity Demanded Quantity Supplied (000 units) (000 units) 1,000 20 120 800 30 80 600 50 50 400 80 30 200 120 20 (i) Using the above data, draw a diagram showing the market demand and market supply curves for 4G TVs, showing the price and quantity of 4G TVs at which this market is in equilibrium. (ii) Define the concept market equilibrium. With reference to the above market, explain how equilibrium is arrived at. (30) (b) The market for wheat is in equilibrium. Explain, with the aid of a separate diagram in each case, the effects which each of the following market situations is most likely to have on the equilibrium position for wheat: (i) Exceptionally wet weather conditions (ii) An increasing percentage of the population is suffering from wheat allergies and intolerance (iii) A decrease in the price of oil. (30) (c) Following recent sharp increases in the price of private rented accommodation, calls have been made for the Irish Government to introduce price/rent controls (a rent ceiling). Advise the Minister for the Environment on the possible economic consequences of the Government intervening in the market by imposing a price ceiling for private rented accommodation. (15) [75 marks] Page 5 of 9 2. (a) (1) State and explain two examples of barriers to entry facing firms wishing to enter a monopoly market. (ii) Explain, with the aid of a diagram, the long run equilibrium position of a monopolist. Identify on your diagram the profit the monopolist makes. (35) (b) A monopolist can increase its profits by engaging in price discrimination. (i) Explain the concept price discrimination, using a suitable example. (ii) State and explain the market conditions necessary for price discrimination to take place. (25) (c) The Commission for Energy Regulation (CER), Ireland's independent energy regulator, has been appointed as the independent economic regulator for Ireland's public water services. Discuss whether or not Irish Water (Uisce Eireann), Ireland's new water utility company, should be regulated. (15)3. (a) In the case of any two of the following three pairs distinguish between the two concepts: . Marginal Cost and Average Cost . Explicit Cost and Implicit Cost . Normal Profit and Supernormal Profit. (20) (b) The table below shows the output and production costs for a small bakery. Units of Total Bread Costs (() 0 100 100 200 200 280 300 330 400 360 500 450 600 600 700 770 (i) Use the data in the table above to answer the following questions: What are the fixed costs of operating this bakery? Explain your answer. . What are the variable costs of producing 300 loaves of bread? What is the average cost of producing 400 loaves of bread? (ii) Using the data from the table above, draw one graph showing the following (you may use graph paper to complete this question): Total costs (label the curve TC) . Total variable costs (label the curve VC) Total fixed costs (label the curve FC) (iii) With reference to the graph you have drawn in part (ii) does the graph represent the short run or the long run? Outline a reason for your answer. (35) (c) Discuss possible economies of scale and diseconomies of scale that the bakery may experience, should it expand its scale of production in the long run. (20) [75 marks]
