Question 1;

1. The following diagram depicts the situation in the international ship freight market which is competitive. The downward sloping curve "A" is the (initial) demand curve. The upward sloping line "C" is the short run supply curve. Explain what would happen in the short and in the long run if demand contracted from curve "A" to curve "B". Explain the difference (or the lack of it) between the short and the long run. You can use the figure to clarify your answer

Question 2;

2. Explain the differences in outcome when a monopolist uses a uniform price and when he is able to practice complete price discrimination (CPD)

Question 3;

1. Bundling. Consider the following situation. You need to decide how to price the two channels offered by your company, "High-tech" providing programs on engineering, science and technology, and "Wildlife" providing, well, wild-life programs. You know that you have two customer groups, "Geeks" and "Regular". For every customer group, the number of customers and their willignesses to pay are displayed in the table below. Explain how you would price and why? What are your profits from the different pricing strategies? Your marginal cost is zero for both channels (7 points). products Number of customers High-tech Wildlife Geeks 3000 15 4 Regular 10000 3 8

Question 4;

1. (a) (i) Show, by means of a labelled diagram, the market demand and supply curves for

games consoles e.g. Xbox, PlayStation, Nintendo DS. Identify and explain the market

equilibrium position.

(ii) Explain, with the aid of a separate diagram in each case, the effects which each of the

following is most likely to have on the above equilibrium position:

50% reduction in the price of computer games used with the games console;

Quota placed on the quantity of games consoles entering Ireland;

Government introduce a 2% levy (tax) on all income earned. (30 marks)

(b) (i) Define income elasticity of demand and price elasticity of demand.

(ii) Which figure stated below is most likely to represent each of the following:

Income elasticity of demand for low price cuts of meat;

Income elasticity of demand for Apple iPhones;

Price elasticity of demand for Petrol.

- 1.6 - 0.1 + 4.3 Give reasons for your choice in each case. (30 marks)

(c) Assume Income elasticity of demand for games consoles is + 2.5 and total sales in 2008 were

100,000 units.

Calculate the expected total sales for the year if consumers' incomes are expected to fall by 8%

in 2009. Show your workings.