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(b) (i) Can you think of a market structure that allows super-normal profit in the long
run? (2)
(ii) Can MC intersect MR in the inelastic region of the monopolist’s demand curve?
Argue in favour of your answer. (4)
(iii) A monopolist operates two plants with the following cost functions:
C1(Q1) = 10Q12, C2(Q2) = 20Q22. If the inverse demand function is P = 700 – 5Q, then
determine the output level produced in each plant and the market price.(4)
(c) Does a simple monopolist offer greater level of employment than competitive firms
when labour is the only factor of production and workers compete among themselves
for work? Explain.
GROUP – B
MACRO ECONOMICS - II (Marks: 50)
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