Neco Model Questions Vol1 2018 Economics Question 6

Practice essay / theory question 6 from the 2018 Neco Model Questions Vol1 Economics examination. This question covers Market Structures .

Neco Model Questions Vol1 2018 Economics Essay / Theory

Topic: Market Structures

Question 6 NECO_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • essay

The market for mobile‑phone accessories in a Nigerian city is dominated by four major firms. Each firm sells a slightly differentiated product and faces the same constant marginal cost of ₦80 per unit. The market demand for the product is given by the inverse demand function P = 500 – 2Q (where P is price in Naira per unit and Q is total market output in thousands of units). The regulator is considering imposing a price ceiling of ₦120 per unit to protect consumers.

Question Parts

( a )

Identify the most appropriate market structure for this industry and justify your choice with at least three characteristic features.

( b )

Assuming the firms behave as Cournot oligopolists, derive the symmetric reaction function for one firm and calculate the Cournot‑Nash equilibrium price and output per firm.

( c )

If the regulator imposes a price ceiling of ₦120 per unit, determine the new total market output and the output per firm, assuming firms continue to act as Cournot competitors and the ceiling is binding.

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About This Question

This is Neco Model Questions Vol1 2018 Economics Question 6. It is one of the essay questions from the 2018 Neco Model Questions Vol1 Economics examination.

The question covers Market Structures .

View More Neco Model Questions Vol1 2018 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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