Question

Question 2

Explain what would have to happen to this market for it to become more like perfect competition. What would you expect to happen to the price of phone plans and the quantity of phones in service if this was to occur? (1.5 marks)

Instructions • This hand-up is based on Topics 4 and 5 of BUS 104 • You must submit this hand-up at the beginning of class in Week 7. The hand-up will be retumed to you with feedback in Week 8 • The hand-up must be hand written . Your best out of 4 hand-ups count for 15% of your final mark • Submissions which are 1) through email 2) typed or 3) handed in late will not be accepted. The mobile phone provider market in Australia is one example of an oligopoly yes² OPTUS Telstra onih VOX mobile vodafone COMMONWEALTH FRUSTRALIA Question 1 Why is the mobile phone market in Australia considered to be an oligopoly? (1.5 marks)

Answer 1

Ans: If this market have to be perfect competition market then the government should encourage investors to invest more in telecom sector by giving perks like policy changes and tax benefits. In addition to it, government should break all the rules of the monopoly like banning restriction for other, Cartels, and giving preference. By providing more choice, it will help the consumer to choose his best preference.

If this market becomes a perfect market, then only tariffs plans will decrease. The Consumers now avail more plans and it will result good competition among service providers. This Plan especially help lower and middle income group.Let us suppose a individual income is able to invest(willingness to pay) 1000 rupees in mobile but due to tariff plan it would cost him more than 1000 rupees so he would not prefer. As tariff plans decreases it is now under the budget constraints. So the Quantity of Phones will increase. As the sale increases competition among manufactures also decreases which further results into decrease in the cost of phone.