Gce Model Questions Vol1 2019 Economics Question 6

Practice essay / theory question 6 from the 2019 Gce Model Questions Vol1 Economics examination. This question covers Market Structures .

Gce Model Questions Vol1 2019 Economics Essay / Theory

Topic: Market Structures

Question 6 GCE_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • essay

In a local market for smartphones, three firms – Alpha, Beta and Gamma – dominate. The market price of a standard smartphone is ₦30,000. The firms have the following marginal costs (MC): - Alpha: ₦18,000 - Beta: ₦20,000 - Gamma: ₦22,000 All three firms sell identical products and there is free entry and exit in the long run. Answer the following:

Question Parts

( a )

Identify the market structure that best describes this industry and justify your choice with reference to at least three characteristic features.

( b )

Calculate the Lerner index for each firm and comment on the relative degree of market power exhibited by the three firms.

( c )

Discuss how a collusive agreement among the three firms could affect consumer surplus and dead‑weight loss in this market.

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About This Question

This is Gce Model Questions Vol1 2019 Economics Question 6. It is one of the essay questions from the 2019 Gce Model Questions Vol1 Economics examination.

The question covers Market Structures .

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