Question 22M.1.HL.TZ0.1b
| Date | May 2022 | Marks available | [Maximum mark: 15] | Reference code | 22M.1.HL.TZ0.1b |
| Level | HL | Paper | 1 | Time zone | TZ0 |
| Command term | Discuss | Question number | b | Adapted from | N/A |
Using real-world examples, discuss the impact of large firms having significant market power.
[15]
Marks should be allocated according to the paper 1 markbands for May 2022 forward, part B.
Answers may include:
- Terminology: market power
- Explanation: of the impact of significant market power in terms of the monopoly and oligopoly models
- Diagram: showing monopoly/collusive oligopoly (significant market power)
- Synthesis (discuss): the advantages and disadvantages of significant market power in terms of economies of scale, including natural monopolies, abnormal profits to finance investment in R&D and innovation; the possible welfare loss, the risks in relation to price, output and consumer choice, the possibility that such firms may pursue goals other than profit maximization
- Examples: real-world examples of large firms that have significant market power.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
Good responses acknowledged that the question must allude to monopoly and oligopoly market structures and were able to develop a substantive response in which they were able to utilize real-world examples in order to develop the synthesis appropriate to the discussion. Good candidates also displayed a good level of knowledge and factual data in relation to the examples they offered, enabling greater depth to the synthesis provided.
Some candidates took the question as an opportunity to examine government responses to market power, which misreads the question.
