1. Consider perfect competition, a non-discriminating monopoly and a perfectly discriminating monopoly.
a. Comparing and contrast the equilibrium price and quantity in each of the market structure and identify for each market structure whether it is efficient or results in deadweight loss.
b. Why do governments control certain monopolies? Provide at least one real world example in supporting your argument.
c. Why do governments create certain monopolies?
2. Using a simple example, explain the Comparative Advantage Theory and how Countries can benefit from international trade. What type of economic policy does this theory call for?