You are the Managing Director of a firm that builds new houses. Assume that the market for new houses is initially in equilibrium (where supply equals demand). Explain what would happen to the demand curve and/or supply curve for new houses in each of the following situations. Use graphs to support your answer.

a. There is an increase in population.

b. The cost of building materials increases.

c. Builders become more productive

3) Illustrate and explain, by making use of diagrams, what the expected change in price and quantity would be in the following markets under the scenarios given:

a. Crude oil: As oil reserves decreases, it becomes more difficult to find and recover crude oil.

b. Air travel: Worriers about air safety causes travellers to why away from air travel.

c. Rail travel: Worriers about air safety causes travellers to why away from air travel

4) What is the difference between "a reduction in supply" and "a reduction in the quantity supplied"?

5) Identify and list the 5 most important factors that determine the demand for the product or service of your company/institution. Now identify and list the 5 most important factors that determine the price elasticity of the demand for the product or service of your company/institution. (Make sure that you explain to the reader why you think each particular factor impact the price elasticity of the product/service.) Do you think that the demand for your product is price sensitive or insensitive? Explain fully.

6) Why is "consumer welfare" of any significance to a manager?

7) The product that your company sells is currently highly price inelastic. How will you respond to the following:

a. Your marketing manager suggests increased spending on product development; and

b. You have just heard that your main competitor started advertising ferociously.

8) Changes in the price of the product will influence the income elasticity of demand. Explain why this statement is true.

9) Explain why the elasticity of the market demand for beer may be smaller than the elasticity of demand for one particular brand of beer.

10) A bus company in Gauteng found that when it reduced its price in order to get more people to use the bus - and more people did - the bus company's total revue still remained the same. Why did they get this surprising result?

11)Which of the structure variables mentioned in Baye (Chapter 7) could be regarded as the most important? Explain.

12) Explain the following statement using an example - "The behaviour of firms influences industry structure".

13) Explain the following statement using an example "The performance of firms influences the behaviour of firms"

14) Describe the characteristics of a perfectly competitive market

15) Explain why the individual firm in a perfectly competitive market is a price taker

16) Distinguish between normal profit, economic profit and economic loss. Analyse the conditions for long run equilibrium

17) Examine the marginal cost- marginal revenue rule.

18) Illustrate graphically a situation where a firm in a competitive market is

a) Making a loss

b) Making a normal profit

c) Making abnormal profits

d) Shut down

19) Define monopoly and explain the main characteristics of a monopolistic market

20) Illustrate graphically how the monopolist determines is profit maximising level of output

21) Construct graphically a situation where a monopolist is

a) Making a loss

b) Making a normal profit

c) Making abnormal profits

22) Formulate why it is possible for a monopolist to make abnormal profits in the long run

23) Discuss the following sources of monopoly power:

a) Economies of scale

b) Economies of scope

c) Cost complementarities

d) Patents and other legal barriers

e) Structural barriers to entry

f) Strategic barriers to entry

24) Explain and illustrate graphically why, from a theoretical perspective, monopolies are regarded as generating a loss to society

25) Define monopolistic competition

26) Clearly and adequately describe the characteristics of firms in a monopolistic competitive market

27) Illustrate graphically what the difference is between the long run equilibrium in a perfectly competitive market and a monopolistic competitive market

28) Evaluate the reasons why a firm in a monopolistic competitive markets are likely to have market power

29) Explain how a merger to monopoly could lead to:

a) Higher efficiencies;

b) Lower efficiencies, in an industry.

30) Explain why setting a monopoly price is not "an abuse of a dominant position

31) Dominant firms in an industry are to be blamed when high entry barriers prevail". With the use of examples, argue in favour and against this assertion.

32) "High entry barriers lead to a lack of competition in a market". Is this assertion true or false? Motivate

33) Illustrate graphically and explain how a firm's demand may depend on the actions of other firms

34) Compare the assumptions underlying the kink-demand curve model and the price leadership model.

35) Evaluate the usefulness of each oligopolistic model to a manager and in competition law

36) Compare and contrast the economic outcome of the different oligopolistic models

37) Explain why it is advantages for firms to be a first mover in choosing an output level

38) Define a price-war oligopoly and discuss why it is undesirable from a manager's perspective

39) Formulate the conditions for a market to be contestable

40) Distinguish between a cartel and a trade organisation

41) Examine the types of collusion that occur in real world mark

42) Would you consider the airline industry to be a contestable market? Explain.

43) Theoretically, firms in an oligopoly market have less price and output discretion than a monopoly, and still they are viewed as equally "dangerous" by competition authorities. Explain.

44) Name any two fundamentals about oligopoly markets that you learnt from studying the oligopoly models.

45) Examine how a manager in a firm with market power will determine its profit maximising price

46) Define price discrimination

47) Illustrate and evaluate the different effects on price discrimination on economic outcome

48) Assess how firms with market power can use the following pricing strategies to enhance its profits:

a) two-part pricing

b) block pricing

c) commodity bundling

d) tying

49)Classify the different pricing strategies a firm can employ in a vertical relationship

50) Evaluate and assess the different pricing strategies prohibited by competition law

51) Synthesize the different types of competitive concerns arising from vertical integration and horizontal agreements

52) Assess how firms with special cost and demand structures can use the following pricing strategies to enhance their profitability:

a) Peak-load pricing

b) Cross-subsidies

c) Transfer pricing

d) Price matching

e) Inducing brand loyalty

f) Randomised pricing

53) Illustrate and evaluate the different pricing strategies a dominant firm can use to deter entry / limit competition in a market:

a) Limit pricing

b) Predatory pricing

c) Raising rivals cost

d) Price discrimination

e) First mover advantage

54) Classify the different pricing strategies a firm can employ to raise a rivals cost.

55) Evaluate and assess the different pricing strategies used in conjunction with price discrimination to deter entry.

56) Evaluate each of the following:

a) The link between limit pricing and commitment mechanisms.

b) The link between limit pricing and the learning curve effect.

c) The link between limit pricing and incomplete information.

d) The link between limit pricing and reputation effects.

e) Strategies used by vertically integrated firms to deter/limit entry

f) Strategies used in conjunction with price discrimination to limit entry into a market. o First vs second-mover advantages

57) Analyse the four reasons why free markets may fail

58) Define and evaluate the tools used to determine the degree of market power a firm possesses from both a competition law and economic perspective

59) Illustrate graphically what is meant by "deadweight loss"

60) Explain the rationale for competition/antitrust policy

61) Classify the rule of reason and a per se violation of the Competition Act

62) Formulate restrictive practices

63) Identify the various restrictive practices named in the Competition Act and discuss the relevance and reason for the inclusion of these practices.

64) Evaluate the relevance of the factors that are taken into account in a proposed merger.

65) Explain and illustrate graphically how price regulation can be used to eliminate the deadweight loss of monopoly

66) Define a negative externality and illustrate graphically why the market fails to produce the efficient level of output when there are externalities in production

67) Define a public good with specific reference to non-rival consumption and non-exclusionary consumption

68) Explain and illustrate graphically why public goods are not provided in the socially efficient quantity and what is meant by the free-rider problem

69) Evaluate how incomplete information can lead to inefficiencies in the input usage and in firm's output

70) Suppose an industry is composed of eight firms with the following market shares:

A 30 %

E 8 %

B 25%

F 5%

C15%

G 4%

D 10%

H 3%

Would the Competition Commission likely challenge a merger between

a) Firms C and D

b) Firms F and G

71)Compare various economic and competitive outcomes of prohibited practices

72) Assess the role of exogenous and endogenous barriers to entry in competition analyses

73) Examine the role of standard setting in anti-competitive behaviour

74) Assess the role of the public interest provision in competition law