Microeconomics

Microeconomics

Answer all five (5) of the following questions.
Each question is worth equal marks and will be marked out of 10.
The total mark is 50 and will then be converted to a make it worth 20 percent
References are only required for Question 5.
Question 1
Explain with the use of diagrams where appropriate how perfect competition leads to allocative,
productive and dynamic efficiency.
Question 2
Illustrate with the use of diagrams how the profit maximising price and output for firms in a
monopolistic competitive market structure is determined.
Does the fact that monopolistically competitive markets do not achieve allocative or productive
efficiency mean that there is a significant loss in economic well-being to society in these markets?
Question 3
What is a natural monopoly? If a firm is a natural monopoly, illustrate with the use of diagrams why is
it is necessary to have the price set by a regulatory authority rather than by the market.
Question 4:
(a) Explain with the use of examples the concept of positive and negative extemalities.
(b) Illustrate with the use of diagrams how government intervention can correct them

Question 5:

(a) Outline a micro-economic reform issue that is relevant to the Australian economy

i.e. why has there been reform in this industry or market?
(b) How successful do you think these reform measures were and say why referring to
some data or research that has been performed.
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