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Question 18N.1.HL.TZ0.a

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Date November 2018 Marks available [Maximum mark: 10] Reference code 18N.1.HL.TZ0.a
Level HL Paper 1 Time zone TZ0
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
18N.1.HL.TZ0.a

Explain why prices tend to be relatively rigid in oligopolistic markets.

[10]

Markscheme

Answers may include:

  • definition of oligopoly
  • diagram to show the kinked demand curve with price inelastic demand below the market price and price elastic demand above the market price
  • explanation of price rigidities, with reference to the risk of price wars and/or with reference to the effect that a change in price would have on the total revenue of the oligopolistic firm
  • examples of industries where there are rigid prices/non-price competition/strategic interdependence.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.

Syllabus sections