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Economic Environment of Business
Paper instructions:
1. The removal of imperfections in the market leads to an increase in efficiency in the allocation of resources. Discuss whether you agree with this view
2. (a) Explain what is meant by normal and abnormal profit and when such profits might occur (12 marks).
(b) Discuss the characteristics and possible behavior of firms in an oligopolistic market
3. (a) Explain the three reasons, according to the liquidity preference theory, why people demand money
(b) Use the liquidity preference theory to discuss the possible consequences of an increase in supply of money