Exam (elaborations)
Loughborough University Industrial Economics Mock Exam with Answers
- Module
- Industrial Economics
- Institution
- Loughborough University (LU)
Loughborough University Industrial Economics Mock Exam with Full Answers.
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INDUSTRIAL ECONOMICS(19ECC005)
Mock Exam 3 hours (+1 hour for download/upload)
Answer ONE question from section A
Answer TWO questions from section B
Answer TWO questions from section C
This is a 3-hour exam. In addition, you have ONE hour for downloading the exam paper
and uploading your answers back to Learn.
Name the submitted file as “Bnumber – 19ECC005 – S2E” and include this as part of the
header (replace Bnumber with your Student ID).
You must NOT include your name anywhere in your file or the filename.
Assessment details
Your work should be hand-written and your answers scanned/photographed and
converted to a single pdf document.
This is an open book exam and you may refer to module materials, notes or textbooks when
answering. You may NOT copy and paste diagrams or other content from the module materials
(e.g. lecture PowerPoint slides). Students who do this will be marked down for poor scholarship.
In text citations should use the Harvard style in accordance with the School of Business and
Economics guidelines. You do not need to include a reference list.
Given the nature of the exam, the question in Section A has a word limit of 500 words
(approximately 2 pages excluding diagrams) and each question in Section C has a word limit
of 1500 words (approximately 6 pages excluding diagrams). Questions in Section B do not
have word limits because they are mainly mathematical.
Academic Misconduct/ Plagiarism
Your attention is drawn to University regulation XVII regarding academic misconduct. Please visit
the following link regarding University Regulations involving Academic Misconduct
www.lboro.ac.uk/governance/regulations/18/current.
All marks remain provisional until moderated.
Page 1 of 7
, SECTION A
Answer ONE question
This is worth 10 marks.
1) Write a note on one of the three following concepts:
a) Coordinated effects
Coordinated effects relate to horizontal mergers that raise concerns of a substantial
lessening of effective competition. Coordinated effects arise when there is increased
likelihood of tacit collusion post merger. Provide details of how it is relevant for
competition policy. See Topic 4/5 and Tutorial 3 for more details.
b) The SSNIP test
The SSNIP test, also known as the hypothetical monopolist test, is used to define
markets. This process should be explained. See Topic 1 for more details.
c) Article 101 of the Treaty on the Functioning of the European Union
Article 101 prohibits the agreements between firms, unless they are welfare enhancing.
There should be some discussion of how this relates to horizontal (cartel) agreements
and vertical agreements. See p.31-34 of Motta (2004) for more details, although recall
Article 101 was Article 81 before 2009.
(100% weight)
SECTION B
Answer TWO of the following questions.
Each question is worth 20 marks.
2) Suppose that a market can be represented by a line that has a length of 1 and that
consumers are uniformly distributed on the line. There are a large number of firms that
can enter a market sequentially, where their sunk costs of entry are 1/6. Prices are fixed
such that (𝑝– 𝑐) = 1, where 𝑝 is price and 𝑐 is marginal cost. Suppose that firm 1 and 2
have located as shown in the below figure.
a) Show that it is not profitable for firm 3 to locate as a peripheral firm to the right of
firm 2.
Page 2 of 7
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