Q1. Briefly state the basic characteristics of perfect competition and monopolistic competition. (8 marks)

Q2. Why is the equality of marginal revenue and marginal cost essential for profit maximization in all market structures? Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is perfectly competitive. (6 marks)

Q3. Using diagram (three diagrams) for a representative firm in a perfectly competitive industry, illustrate competitive short run equilibrium (profit and loss); and long run equilibrium (zero economic profit). (6 marks)

Q4. Using diagram (three diagrams) for a monopolist, illustrate short run (profit and loss) and long run (profit) equilibrium. (6 marks)

Q5. Using diagram (three diagrams) for a representative firm in a monopolistic competitive industry, illustrate short run (profit and loss) and long run equilibrium (zero economic profit) (6 marks)

Q6. Why do oligopolies exist? List five or six oligopolists whose products you own or regularly purchase. What distinguishes oligopoly from monopolistic competition? (4 marks)

Q7. Explain in words and graphically how price (rate) regulation may improve the performance of monopolies. In your answer distinguish between (a) socially optimal (marginalcost) pricing and (b) fairreturn (averagetotalcost) pricing. What is the "dilemma of regulation"? (8 marks)

Q8. Using diagrams for both the industry and a representative firm, illustrate competitive longrun equilibrium. Assuming constant costs, employ these diagrams to show how (a) an increase in market demand will upset that longrun equilibrium. Trace graphically and describe in words the adjustment processes by which longrun equilibrium is restored. (6 marks)