Industrial Economics (IEcoS (Economic Services) Economics Paper-3): Questions 1 - 11 of 17

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Question number: 1

» Industrial Economics » Micro Level Investment Decisions and Behavior of Firms

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Appeared in Year: 2017

Essay Question▾

Describe in Detail

Distinguish between Cournot and Bertrand models of duopoly. (200w, 15 Marks)

Explanation

Classical models of duopoly (only two producers) are given by French economists Augustin Cournot and Joseph Bertrand. Both the models, assuming that firms ignore their interdependence, provides solution to the price-output determination problem in oligopoly. However, there are important differences in the assumptions of these models.

Cournot and Bertrand models of duopoly.

Cournot and Bertrand Models of Duopoly.

Cournot and Bertrand models of duopoly.

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Question number: 2

» Industrial Economics » Entry Preventing Pricing

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Appeared in Year: 2017

Essay Question▾

Describe in Detail

What is the entry preventing pricing strategy? (100w, 5 Marks)

Explanation

  1. In a general setting, new firms tend to enter the industry after lured by excess profits [Price Average Cost (AC) ] enjoyed by the existing firms. Thus, reducing the profits to zero

  2. Entry preventing pricing strategy is one whereby existing firms fix the price at a level of demand which restrict

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Question number: 3

» Industrial Economics » Conduct and Performance of Firms

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Appeared in Year: 2010

Essay Question▾

Describe in Detail

Write a short note on entry barriers.

Explanation

Barriers to entry are the economic term describing the existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing firms because they protect their revenues and profits.

  • Common barriers to entry include special tax benefits to existing

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Question number: 4

» Industrial Economics » Monopolistic Price Theory, Oligopolistic Interdependence and Pricing

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

Write a note on Rationale of kinked demand curve.

Explanation

  • The kinked demand curve model assumes that a business might face a dual demand curve for its product based on the likely reactions of other firms to a change in its price or another variable.

    • The kinked demand curve of oligopoly was developed by Paul M. Sweezy in 1939. Instead of laying emphasis on price-output determination, the model expl

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Question number: 5

» Industrial Economics » Market Structure and Profitability

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Appeared in Year: 2011

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Discuss the different measures of market concentration. Is there any relation between concentration and monopoly power?

Explanation

Market concentration means number and size distribution of sellers in the market.

It has two measures of concentration. One is the absolute measures, which is defined as the measures based on number of firms and their percentage market share and other is the relative measures which defines the percentage share as per size distribution accountin

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Question number: 6

» Industrial Economics » Market Structure and Profitability

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Appeared in Year: 2011

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Write a short note on Contestable Markets.

Explanation

  • Contestable market theory is an economic concept that refers to a market in which there are only a few companies that, because of the threat of new entrants, behave in a competitive manner.

    Contestable market theory assumes that even in a monopoly or oligopoly, the existing companies will behave competitively when there is a lack of barriers,

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Question number: 7

» Industrial Economics » Market Structure

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Appeared in Year: 2010

Essay Question▾

Describe in Detail

Write a short note on economies of scale.

Explanation

Economies of scale are cost advantages reaped by companies when production becomes efficient.

  • Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods.

  • Economies of scale are the competitive advantage that large entities have over smaller ones

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Question number: 8

» Industrial Economics » Market Structure

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Appeared in Year: 2011

Essay Question▾

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Write a short note on S-C-P Paradigm.

Explanation

This approach is used to study firm’s behavior. We can discuss S-C-P Paradigm as follows:

  • Market Structure: It is identified on the basis of intensity or degree of competition between buyers and sellers. Its main features are:

    • Seller’s concentration: it means number and size distribution of sellers in the market. For example in case of mo

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Question number: 9

» Industrial Economics » Conduct and Performance of Firms

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Appeared in Year: 2010

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Describe in Detail

Explain Alfred Weber’s theory of industrial location.

Explanation

  • The basis of his theory is the study of general factors which pull an industry towards different geographical regions. It is thus deductive in approach. In his theory he has taken into consideration factors that decide the actual setting up of an industry in a particular area.

    • Weber’s Problems: Weber was faced with many serious problems.

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Question number: 10

» Industrial Economics » Monopolistic Price Theory, Oligopolistic Interdependence and Pricing

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Appeared in Year: 2010

Essay Question▾

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Analyze how price and output are determined under monopolistic competition.

Explanation

In a monopolistic competition, since the product is differentiated between firms, each firm does not have a perfectly elastic demand for its products.

  • In such a market, all firms determine the price of their own products.

  • Therefore, it faces a downward sloping demand curve. Overall, we can say that the elasticity of demand increases as th

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Question number: 11

» Industrial Economics » Product Differentiation and Market Concentration

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Appeared in Year: 2012

Essay Question▾

Describe in Detail

Write a short note on Types of product differentiation.

Explanation

Product differentiation is that the firms do not produce homogeneous products but differentiated one, which has close substitutes present in the market.

  • It is a very important feature of monopolistic competition and oligopoly.

  • Product differentiation is of two types: horizontal and vertical differentiation.

  • Horizontal differentiation

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