Economics - Reflective Assessment 2

QUESTION 3

1. Define a price maker and explain why the demand curve of a monopoly is more inelastic than the demand curve of a monopolistic competitive firm.     2 Marks
2. Define normal profit and explain why making normal profit is a requirement for any firm who wishes to remain in business in the long run. 2 Marks
3. Why is a perfectly competitive market structure very unlikely to exist in the real world? 1 Mark
4. Why does the share market closely reflects a perfectly competitive market?   1 Mark