For each of the following products, which of the above monopolistic

model is more appropriate for analysis of that market. Explain why?

1.Scouring pads

2.Haircuts

3.Recorded music CDs

4.Automobiles

Explain graphically why a monopolistic competitive firm does not produce at the

socially optimum level of output.

Use the Hotelling's location model to explain the reasons why petrol stations often

are situated near each other on the corners of busy intersection in towns.

(a)An industry consists of eleven identical firms with each firm's cost given as

c(q) = 4q + q². Market demand for the product is Q = 100 - p.

(i)Calculate the following for each firm if all eleven firms participate in a cartel;

1.Price

2.Output

3.Profit

(Hint: The firms jointly produce the output that a monopoly would produce if it

had the same costs as the eleven firms combined. i.e you need firstto find the

monopoly's costs and monopoly output)

Cartels needed some mechanisms put in place for their agreements to remain

successful.

Briefly describe the SIX (6) methods used to achieve the above objective.