MARKET STRUCTURE

The figure below shows the percentage market share of Indian telecommunications firms in 2015.

(a) With reference to the figure above, explain the type of market structure. (3%)

In 2017, the three largest telecommunication operators, Bharti Airtel, Vodafone Essar and Idea Cellular
colluded together to simultaneously fix the price of local call at Rs 1.20 per minute.
(b) *With reference to the data above and your knowledge of Economics, analyse the impacts of
collusion to the
i) consumers; OR
ii) telecommunication companies in India. (6%)
(Hint 1: Explain the impact of the collusion in the telecommunication market in India.)
(Hint 2: Explain how consumers or telecommunication companies can be affected by collusion.)

GOVERNMENT INTERVENTIONS
The Fair Work Commission (FWC) decides to increase the national minimum wage to AUD 38 per hour
(before tax) to most employees in 2024 while a special minimum wage is applicable to trainees,
apprentices and workers with disability. The reason of raising the minimum wage is to close the income
gap between rich and poor.
(a) * With reference to the data above and your knowledge of Economics, analyse the impacts of
introducing the minimum wage to
i) businesses; OR
ii) disadvantaged workers in Australia. (6%)
(Hint 1: Explain the impact of introducing minimum wage in Australia.)
(Hint 2: Explain how businesses or disadvantaged workers can be affected by the minimum wage.)
(b) Copy the diagram below onto your answer sheet, show the effects of a minimum wage (W1) that
has been set above the equilibrium wage (We). You are reminded to label the new quantity of labour
demanded and the new quantity of labour supplied. (3%)

The Fair Work Commission (FWC) argues that an increase of 3.75% on national minimum wage may
not increase the unemployment in Australia.
(c) Explain one reason why the minimum wage may not lead to an increase in unemployment. (3%)

EXTERNALITIES
More than half of Cambodia’s 6,000 km of roads have been classified as ‘of poor quality’ by the Ministry
of Public Works and Transport. As business grows in the country, drivers overload their trucks, which
leads to safety issues and greater damage to the roads. A higher level of investment is needed from the
government to repair damage and to build new roads which would need less maintenance.
(a) * With reference to the data above and your knowledge of economics, analyse the impacts of poor
quality of roads to
i) local residents; OR
ii) workers in Cambodia. (6%)
(Hint 1: Explain the external costs caused by poor quality of roads in Cambodia.)
(Hint 2: Explain how local residents or workers can be affected by such external costs.)