Explain the concept of circular flow of income, Microeconomics

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Problem 1:

i) It has often been argued that a monopoly has both costs and benefits. Discuss.

ii) Explain, using diagram the short and long equilibrium positions of a monopoly firm.

iii) Using examples, explain how a monopoly imposes barriers to prevent competition.

Problem 2:

i) Explain the concept of circular flow of income.

ii) Comment on the view that ‘GDP is not the best measure to evaluate economic growth and standard of living. Real GDP per capita is a better measure'.

iii) What is economic growth? Identify and comment briefly on the possible contributors to economic growth.


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