Topic: Managing the Different Market Structures
Problem 1.
- Explain, how or why the commodity (say bottled water) market can be considered as a good example of perfect competitive market?
- Also, explain why is the long run market supply curve horizontal in long run in this kind of market?
- How does a competitive firm determine the quantity that maximizes profit?
- When might a competitive firm shutdown in the short run and exit the market in the long run?
- Moreover, explain why perfect competitive markets are regarded as the best market structure for the society? [Marks: 1 x 5 = 5, obtained marks: ___]Problem 2.
- Explain, why could the Saudi Electricity market be said as a Monopoly Market?
- What are the main barriers to entry in the electricity supply market and how Saudi Electricity Supply Company (SESC) got the status of Monopoly power?
- Also explain why a monopoly firm (SESC for example) choose not to produce at its full capacity?
- How does monopoly affect society’s well-being?
- What is price discrimination and how it helps the firm and the consumers?