MANAGERIAL ECONOMICS EXAM REPLACEMENT ESSAY Answer ONE of the following questions. Word limit: 2,000 words 1. “The theory of perfect competition provides inadequate guidance to owners on how to run a business. It does, however, provide guidance to policy makers on how to regulate markets via competition policy.” Discuss. 2. Consider a duopoly where two firms produce a homogenous product and set output so as to maximise profit. Is it possible for the 2 firms to collude? Explain your reasoning. 3. “Price competition is important, but so too are non-price strategies, such as, advertising, investment in R&D, innovation, mergers and takeovers, and reputation building.” Discuss, commenting on the relative importance of price and non-price strategies. You should demonstrate reading, knowledge and understanding of the subject matter covered in the course. Good answers are well-structured and clear, containing sound analysis at the heart of the essay with good introductory and concluding paragraphs that address the question. Use your reading and knowledge of the literature to back up the arguments you make in your essays Where there are areas of debate . the use of perfect competition as a benchmark it is good to summarise the contours of the debate Make sure you answer ONE question only and do not exceed 2,000 words – the questions have been designed so that they can be to be competed to the highest standard in 2,000 words.
