DIPLOMA IN BUSINESS STUDIES

ABBE3033 BUSINESS ECONOMICS

TUTORIAL 4: Perfect Competition & Monopoly

Question 1(2016/17)

(a) Describe any FOUR (4) characteristics of a monopoly market. (8 marks)

(b) Explain the difference between ‘price taker’ and ‘price maker’. (4 marks)

Question 2 ( August 2015/16)

(a) (i) Define a ‘ price maker’. (2 marks)

(ii) Using THREE (3) relevant characteristics of a monopolist market structure, explain
why a firm in this structure is a price maker. (6
marks)

(b) Compare how a perfectly competitive market structure and a monopolist determine their profit
maximising price and quantity. (4 marks)

Question 3 (April 2011/12)

(a) (i) Distinguish between allocative and productive efficiencies. (4 marks)

(ii) Briefly explain why firms in a perfectly competitive market can achieve both allocative
and productive efficiencies. (4 marks)

(iii) Briefly explain why as compared to firms in a perfectly competitive market, a

monopolist is unable to achieve allocative and productive efficiencies. (4 marks)

Question 3 ( March 2014/15)

(a) (i) Explain the difference between ‘ price taker’ and ‘ price maker’. (4 marks)

(ii) Using TWO (2) relevant characteristics of a perfectly competitive market structure,
explain why a firm in this structure is a price taker. (4 marks)

(April 2013/2014)

(b) Compare the demand curve of a monopolistic competitor to a perfectly competitive firm and a
monopoly. (4 marks)

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Question 4 (Apr/May 08/09)

(a) Discuss any FOUR (4) differences between a monopoly and a perfectly competitive firm.
(8 marks)
Question 4 (Jan 2013/14)

(b) (i) Define ‘price discrimination’. (2 marks)

(ii) Explain why many firms practice price discrimination by offering discounts to students.
(4 marks)

Question 5(Dec/Jan 2011/12)

No More Monopoly of TV for Popular Sports

The Ministry of Information, Communication and Culture will implement a new policy to ensure that
popular television, programmes, especially popular sports, are no longer monopolised by a particular
broadcasting or media corporation.

Minister Datuk Seri Dr RaisYatim said the matter had been conveyed to the parties concerned including
Astro. “We want Astro, for example, to create a productive and fair cooperation network with Media
Prima and especially RTM.”

“Those without Astro facilities don’t get TV sports programmes where RTM is a government
broadcasting body, and in this matter, I apologies on behalf of the ministry,” he told reporters after the
simultaneous launching of the 1 Malaysia Community at Sabah state level and Mobile Post as well as
appreciating the election workers for the BatuSapi parliamentary by-election.

Dr.Rais was commenting on the complaints, especially from those who don’t subscribe to Astro, who
could not watch the Malaysia Games (Sukma) held in Kuala Lumpur this year.

“We want to implement the new policy and under the license issued by the Malaysian Communications
and Multimedia Commission (MCMC), we will change this situation.” “In order words, there will be no
more monopoly.” he said.

Adapted from The Star Online, 2011, “No More Monopoly of TV for Popular Sports, Says Dr Rais”,
viewed on 29 September2011,
<http://biz.thestar.com.my/services/printerfiendly.asp?file=/2011/6/11/nation/20110611210324.asp&
sec=nation>
Required:

(a) Explain briefly any THREE (3) characteristics of a monopolist. (6 marks)

(b) Based on the article above, analyse why the government would like to break up monopoly in the
broadcasting industry. (4 marks)

(c) Using an appropriate diagram, discuss the impact of the monopolist on the society’s welfare.
(6 marks)

(d) Explain briefly the effects on market outcomes when the government curbs monopoly power in
the broadcasting industry. (4 marks)
[Total: 20 marks]

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