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Problem 1:
a. Describe the term ‘inflation' and explain the relationship between money supply and inflation.
b. Describe the conditions and processes that are associated with the following types of inflation:
(i) Demand-pull; and (ii) Cost-push.
Problem 2:
a. What are the main reasons why a government might seeks to control a monopoly firm's profit?
b. Draw a diagram to compare long run output decisions for a monopolist and a perfectly competitive firm.
c. Describe why in some ways monopolies can be good for an economy.
Cost in the Short Run Marginal Cost (or MC) is the cost of expanding output by one unit. As fixed costs have no impact on marginal cost, it can be given as: Average Total
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