Gce Model Questions Vol1 2017 Economics Question 6

Practice essay / theory question 6 from the 2017 Gce Model Questions Vol1 Economics examination. This question covers Market Structures .

Gce Model Questions Vol1 2017 Economics Essay / Theory

Topic: Market Structures

Question 6 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • essay

The market for bottled sachet water in a Nigerian city has the following characteristics: - A large number of small firms sell an identical product. - There are no legal or technical barriers to entry. - Firms are price‑takers; the market price is determined by the interaction of total supply and total demand. - Recently a large multinational company entered the market and now accounts for about 30 % of total sales. - The government has introduced a price ceiling of ₦25 per sachet, which is below the current equilibrium price of ₦30 per sachet. Answer the questions that follow.

Question Parts

( a )

Identify the market structure that best describes the market before the multinational entered. Justify your answer with at least three relevant characteristics.

( b )

After the entry of the multinational, discuss whether the market structure has changed. Use the concepts of market concentration and barriers to entry in your explanation.

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About This Question

This is Gce Model Questions Vol1 2017 Economics Question 6. It is one of the essay questions from the 2017 Gce Model Questions Vol1 Economics examination.

The question covers Market Structures .

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