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Question 01–(12marks)–200-300 Words
a)The taxi industry in NSW used to have a mono poly before the arrival of Uber.Explain with reference
to the characteristics of a monopoly why this was so. How much did a taxi license cost?
b)Assuming that the industry was making economic profits, illustrate the situation of the taxi industry
monopoly in a diagram.Your diagram must be half an A4 page.
c)If this was the situation in the short run, what would happen in the long run and why?
d)Explain with reference to the characteristics of a monopoly, how Uber was able to enter the market in NSW.
Question 02
START A NEW PAGE
a) Now that Uber has entered the NSW taxi services market , explain why the industry has changed from
a monopoly to one that is closer to monopolistic competition.
b)Re-draw your diagram in 1.b and explain the transition from the short run to the long run after the
entry of Uber.Your diagram must be half an A4 page.
c)Compare and contrast your answer in 2.b to the long run situation in a perfectly competitive market
and the long run situation in a monopoly.
d)Assuming that the market has become monopolistically competitive, w
hat are some strategies that taxi
drivers could implement to help retain some of their profits, even in the long run?
e)1 mark–take a photograph of an example of a firm (/s) in monopolistic competition. Share your
example on social media (Twitter, Facebook, Instagram, Weibo, QQ, etc.) using the hashtags:
#mqecon111 and #mq moncomp). Include a screenshot of your social media posting–your screenshot
should be just half an A4 page).
ECONOMICS EVERYDAY
a)Re-draw your final diagram in 2.b–where you are re-drawing only the long run situation under
monopolistic competition. Suppose that there is an increase in the price of petrol, show the short run
impact on your diagram. Your diagram should be half an A4 page.
b)Explain your answer to 3.a.
c)Re-draw your final diagram in 2.b–where you are re-drawing only the long run situation under
monopolistic competition. Suppose that there is an increase in the price of car number plate registration, show the
short run impact on your diagram.
Your diagram should be half an A4 page.
d)Explain your answer to 3.c
Question 04a) Research question–Fortraditional taxis,fares are regulated and not determined by the market. Draw
a diagram of a taxi market where fares are capped with an enforced‘price ceiling’that is set at $2.50 per kilometre whereas the free market equilibrium price would be $3.00 per kilometre.Your diagram should be half an A4 page.
Clearly label the quantity traded (exchanged between buyers and sellers).
b)Using your diagramin 4.a,critically comment on whether all consumers are actually better off under
this price ceiling compared to a free market equilibrium.
c)Under Uber,where there is no price ceiling,there is ‘surge pricing’ where drivers can increase their fares based on unusual increases in demand, based on what consumers are willing and able to pay. Use a graph of the market to depict such a situation of surge pricing (that takes the price beyond $3.00 per kilometre).
Your diagram should be half an A4 page.Compare the two free market equilibrium points.
d)Using your diagram in 4.c,criticallycomment on whether all consumers are actually better off under
surge pricing compared to a price ceiling.
e)1 mark–take a photograph of an example of a firm’s costs. Share your example on social media (Twitter, Facebook, Instagram, Weibo, QQ, etc.) using the hashtags: #mqecon111 and #mq costs).
Include a screenshot of your social media posting–your screenshot should be just half an A4 page)
Question 05
a)For the purposes of this question,assume that the newly formed taxi services market that includes
traditional taxis and Uber cars,is perfectly competitive (perfect competition) . Draw a situation of this
industry in long run conditions. The market is to be on the left and an individual firm is to be on the right.
Your entire diagram should take up one full landscaped A4 page.
b)Explain,in detail,the long run conditions in
5.a.c)Re-draw your diagram in 5.a. Assume that due to an extreme weather event , the general population is
suddenly halved overnight. The population of taxi drivers is unaffected as the ywere all protected while
in their taxis during the extreme weather event . Show the impact of this on this new diagram.
d)Explain your answer to 5.c
Question 06
a)Assume now that the extreme weather event (in Question 5) has completely disappeared (of course,
remember that the population is still halved) .Now, why would some taxi drivers be unable to leave or exit the industry in the short run? What is their short run decision making rule when experiencing losses and why?
b)Draw two diagrams for two separate firms in a perfectly competitive market: one which is better off
shutting down in the short run and one which is better off continuing to operate in the short run. Each diagram should be quarter of an A4 page.
c)Re-draw your diagram of your final answer in 5.c. Show the long run impact on this diagram
. Your diagram should be half an A4 page.
d)Explain your answer to 6.c.
e)1 mark–take a photograph of an example of a firm(/s) in perfect competition. Share your example on social media (Twitter, Facebook, Instagram, Weibo, QQ, etc.) using the hashtags: #mqecon111 and #mq perfectc omp). Include a screenshot of your social media posting –your screenshot should be just half an A4 page)
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