17 Jul DISCUSS THE POSSIBLE EFFECTS OF THAT POLICY MOVE.
Microeconomics
Order Description
Answer the two following questions. Each answer must be no longer than 1,000 words.
Questions.
1. The European Court has defined a dominant market position as:
‘…a position of economic strength enjoyed by an undertaking which enables it to […] behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers’
Does this definition make economic sense? How should it be interpreted in the light of the economic theory of monopoly and oligopoly?
2. About ten years ago, European Common Agricultural Policy (CAP) underwent a major change. In the past, CAP would set price floors on various agricultural products in order to support farmers. In contrast, current policy directly subsidises farmers. Subsidies may be a flat rate payment for maintaining land in cultivatable conditions (currently around £250 per hectare in England), or may depend on the land’s crop in a given past year, which is taken as reference point (as in Scotland). Discuss the possible effects of that policy move.
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