Problem 1:

(i) Assuming a Cournot duopoly where the market demand is estimated as:

P = 100 - Q

The marginal cost is estimated to be constant at Rs. 10 for the two firms. Calculate the equilibrium price and output for each firm.

(ii) Based on (i), explain the incentives for collusion in the above market?

Probelm 2:

(i) Explain the different measures of market concentration.

(ii) Discuss the importance of competition on industrial efficiency.

Probelm 3:

(i) Explain the term ‘wage-cost spiral'.

(ii) Explain how business cycles affect economic growth.

(iii) Critically discuss the link between inflation and unemployment.