Question 20N.1.HL.TZ0.b
| Date | November 2020 | Marks available | [Maximum mark: 15] | Reference code | 20N.1.HL.TZ0.b |
| Level | HL | Paper | 1 | Time zone | TZ0 |
| Command term | Discuss | Question number | b | Adapted from | N/A |
Discuss how governments restrict monopoly power.
[15]
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part B.
Answers may include:
- definition of monopoly power
- a monopoly diagram to show a monopoly which is not producing at the profit-maximizing level of output because the price of its product is regulated by the government
- explanation of why governments might choose to restrict monopoly power and how it might be done through government regulation of prices, legislation to prevent cartels and mergers, nationalization or the break-up of firms with monopoly power
- examples of industries that were monopolized where a government has sought to exercise control
- synthesis or evaluation (discuss).
Discussion may include: consideration of the relative merits of alternative means by which monopolies might be restricted. “Real-life” examples would be very suitable as a means to support the discussion.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
NB It should be noted that definitions, diagrams, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
The most prepared candidates were able to define precisely monopoly power, explain and discuss the government policies that restrict monopoly power, and support their answers with appropriate diagram and examples. However, there were quite a few candidates that strayed toward explaining and evaluating monopoly as a market structure.
