DP Economics
Question 21M.3.HL.TZ0.3c
| Date | May 2021 | Marks available | [Maximum mark: 2] | Reference code | 21M.3.HL.TZ0.3c |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | State | Question number | c | Adapted from | N/A |
c.
[Maximum mark: 2]
21M.3.HL.TZ0.3c
Note that a widget is an imaginary product.
In the country of Laurania, the widget industry operates as an oligopoly. The Minister for Finance is worried that the firms in the industry might abuse their power by acting together as a monopoly, and has said that the industry’s concentration ratio is cause for concern.
(c)
State two government responses to the abuse of monopoly power.
[2]
Markscheme
Award [1] for each valid government response stated.
Answers may include:
- legislation to prevent collusion between firms
- legislation to prevent mergers deemed to be anti-competitive
- legislation to break up monopolies deemed to be undesirable
- legislation to reduce barriers to entry
- anti-monopoly/antitrust legislation, but not in addition to any of the above four
- trade liberalization measures to encourage competition from overseas
- price regulation
- nationalization/state-ownership
- fines/sanctions against firms
- any other reasonable response.
NB Deregulation should not be accepted unless its nature is indicated (as deregulation could also increase monopoly power).
Examiners report
Well-answered. A small proportion of candidates listed "deregulation" as a response, although it could arguably either increase or reduce monopoly power.
