2.11 Market failure—market power (HL only)

Distinguish between perfect competition and monopolistic competition.

Distinguish between perfect competition and monopolistic competition.

Distinguish between perfect competition and monopolistic competition.

Define the term monopoly indicated in bold (Text E, paragraph [2]).

Using a monopoly diagram, explain why a profit-maximizing state-run telecommunications firm might be making a loss (Text E, paragraph [2]).

Define the term monopoly indicated in bold (Text E, paragraph [2]).

Using a monopoly diagram, explain why a profit-maximizing state-run telecommunications firm might be making a loss (Text E, paragraph [2]).

Define the term monopoly indicated in bold (Text E, paragraph [2]).

Using a monopoly diagram, explain why a profit-maximizing state-run telecommunications firm might be making a loss (Text E, paragraph [2]).

Distinguish between perfect competition and monopolistic competition.

Distinguish between perfect competition and monopolistic competition.

Distinguish between perfect competition and monopolistic competition.

Define the term total revenue indicated in bold in the text (paragraph [6]).

Calculate the change in expenditure on imported oranges as a result of the increase in demand.

Using information from Figure 1, calculate Firm A’s total fixed costs.

The market price of almonds is $11 per kilogram. Using Figure 1, identify the quantity of almonds Firm A must produce in order to maximize profits.

Calculate the economic profit/loss when Firm A is producing at the output level identified in part (b)(i).

Using Figure 2 and the information in Table 4, calculate the total profit earned by petrol suppliers in New Delhi per day.

Determine the missing cost figures and insert your answers in Table 1.

Using the data provided in Figure 2, calculate the profit earned by these firms if they are operating at the profit-maximizing level of output in the market for cheese.

Calculate the change in expenditure on imported oranges as a result of the increase in demand.

Calculate the change in expenditure on imported oranges as a result of the increase in demand.

Using information from Figure 1, calculate Firm A’s total fixed costs.

The market price of almonds is $11 per kilogram. Using Figure 1, identify the quantity of almonds Firm A must produce in order to maximize profits.

Calculate the economic profit/loss when Firm A is producing at the output level identified in part (b)(i).

Using information from Figure 1, calculate Firm A’s total fixed costs.

The market price of almonds is $11 per kilogram. Using Figure 1, identify the quantity of almonds Firm A must produce in order to maximize profits.

Calculate the economic profit/loss when Firm A is producing at the output level identified in part (b)(i).

Using Figure 2 and the information in Table 4, calculate the total profit earned by petrol suppliers in New Delhi per day.

Using Figure 2 and the information in Table 4, calculate the total profit earned by petrol suppliers in New Delhi per day.

Determine the missing cost figures and insert your answers in Table 1.

Determine the missing cost figures and insert your answers in Table 1.

Using the data provided in Figure 2, calculate the profit earned by these firms if they are operating at the profit-maximizing level of output in the market for cheese.

Using the data provided in Figure 2, calculate the profit earned by these firms if they are operating at the profit-maximizing level of output in the market for cheese.

Define the term total revenue indicated in bold in the text (paragraph [6]).

Define the term total revenue indicated in bold in the text (paragraph [6]).

Discuss the view that competitive markets will always achieve allocative efficiency.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

Based on the information in Figure 2, state whether the firms in this market are making normal profits, economic profits or economic losses.

On Figure 2, draw and label appropriate additional curves to show how a perfectly competitive market will move from short-run equilibrium to long-run equilibrium.

Using your answer to part (c)(ii), explain how the market adjustment takes place.

Using a perfect competition diagram, explain whether farmers in the Philippines are making an economic profit or loss (Table 1).

Using a perfectly competitive firm diagram, explain the effect of declining prices of coffee beans on the profits of Honduras’ coffee farmers in the short run (paragraph [2]).

Distinguish between perfect competition and monopolistic competition.

Based on the information in Figure 2, state whether the firms in this market are making normal profits, economic profits or economic losses.

On Figure 2, draw and label appropriate additional curves to show how a perfectly competitive market will move from short-run equilibrium to long-run equilibrium.

Using your answer to part (c)(ii), explain how the market adjustment takes place.

Based on the information in Figure 2, state whether the firms in this market are making normal profits, economic profits or economic losses.

On Figure 2, draw and label appropriate additional curves to show how a perfectly competitive market will move from short-run equilibrium to long-run equilibrium.

Using your answer to part (c)(ii), explain how the market adjustment takes place.

Using a perfect competition diagram, explain whether farmers in the Philippines are making an economic profit or loss (Table 1).

Using a perfect competition diagram, explain whether farmers in the Philippines are making an economic profit or loss (Table 1).

Using a perfectly competitive firm diagram, explain the effect of declining prices of coffee beans on the profits of Honduras’ coffee farmers in the short run (paragraph [2]).

Using a perfectly competitive firm diagram, explain the effect of declining prices of coffee beans on the profits of Honduras’ coffee farmers in the short run (paragraph [2]).

Distinguish between perfect competition and monopolistic competition.

Distinguish between perfect competition and monopolistic competition.

Discuss the view that competitive markets will always achieve allocative efficiency.

Discuss the view that competitive markets will always achieve allocative efficiency.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

Discuss the view that competitive markets will always achieve allocative efficiency.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

Using a theory of the firm diagram, explain the output and pricing decision of M-Kopa if it chooses to pursue the goal of revenue maximization (paragraph [6]).

Evaluate the view that monopoly is an undesirable market structure as it fails to achieve productive and allocative efficiency.

Examine the role of barriers to entry in making monopoly a less desirable market structure than perfect competition.

Discuss the view that barriers to entry in a monopoly will always lead to abnormal profits in the long run.

State two assumed characteristics of a monopoly.

Using Figure 3, calculate the economic profit when Firm B is maximizing its profits.

Using Figure 3, calculate the total revenue when Firm B is maximizing its revenue.

Explain how a natural monopoly may arise.

Discuss the consequences of a perfectly competitive market becoming a monopoly market.

Using real-world examples, discuss the impact of large firms having significant market power.

Discuss the view that barriers to entry in a monopoly will always lead to abnormal profits in the long run.

Discuss the view that barriers to entry in a monopoly will always lead to abnormal profits in the long run.

State two assumed characteristics of a monopoly.

Using Figure 3, calculate the economic profit when Firm B is maximizing its profits.

Using Figure 3, calculate the total revenue when Firm B is maximizing its revenue.

State two assumed characteristics of a monopoly.

Using Figure 3, calculate the economic profit when Firm B is maximizing its profits.

Using Figure 3, calculate the total revenue when Firm B is maximizing its revenue.

Explain how a natural monopoly may arise.

Explain how a natural monopoly may arise.

Discuss the consequences of a perfectly competitive market becoming a monopoly market.

Discuss the consequences of a perfectly competitive market becoming a monopoly market.

Using real-world examples, discuss the impact of large firms having significant market power.

Using real-world examples, discuss the impact of large firms having significant market power.

Discuss the view that competitive markets will always achieve allocative efficiency.

Discuss the view that competitive markets will always achieve allocative efficiency.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

Using a theory of the firm diagram, explain the output and pricing decision of M-Kopa if it chooses to pursue the goal of revenue maximization (paragraph [6]).

Using a theory of the firm diagram, explain the output and pricing decision of M-Kopa if it chooses to pursue the goal of revenue maximization (paragraph [6]).

Evaluate the view that monopoly is an undesirable market structure as it fails to achieve productive and allocative efficiency.

Evaluate the view that monopoly is an undesirable market structure as it fails to achieve productive and allocative efficiency.

Examine the role of barriers to entry in making monopoly a less desirable market structure than perfect competition.

Examine the role of barriers to entry in making monopoly a less desirable market structure than perfect competition.

Discuss whether an oligopolistic firm should collude rather than compete.

Explain why producers in an oligopolistic market might choose to engage in non-price competition.

Using real-world examples, discuss the impact of large firms having significant market power.

Explain why producers in an oligopolistic market might choose to engage in non-price competition.

Explain why producers in an oligopolistic market might choose to engage in non-price competition.

Using real-world examples, discuss the impact of large firms having significant market power.

Using real-world examples, discuss the impact of large firms having significant market power.

Discuss whether an oligopolistic firm should collude rather than compete.

Discuss whether an oligopolistic firm should collude rather than compete.

Sketch and label a diagram to illustrate the long-run equilibrium for a firm in monopolistic competition.

Explain why a monopolistically competitive firm can make economic (abnormal) profit in the short run, but not in the long run.

Distinguish between perfect competition and monopolistic competition.

Assuming that this catering market is in long-run equilibrium, sketch a diagram in which the profit-maximizing level of output for a firm in this market is shown.

Sketch and label a diagram to illustrate the long-run equilibrium for a firm in monopolistic competition.

Sketch and label a diagram to illustrate the long-run equilibrium for a firm in monopolistic competition.

Explain why a monopolistically competitive firm can make economic (abnormal) profit in the short run, but not in the long run.

Explain why a monopolistically competitive firm can make economic (abnormal) profit in the short run, but not in the long run.

Distinguish between perfect competition and monopolistic competition.

Distinguish between perfect competition and monopolistic competition.

Assuming that this catering market is in long-run equilibrium, sketch a diagram in which the profit-maximizing level of output for a firm in this market is shown.

Assuming that this catering market is in long-run equilibrium, sketch a diagram in which the profit-maximizing level of output for a firm in this market is shown.

Explain two factors that might give rise to economies of scale for a firm.

Using a cost diagram, explain how membership in the common market may allow producers in South Sudan to gain economies of scale (paragraph [6]).

Explain two reasons why a monopoly may be considered desirable for an economy.

Define the term economies of scale indicated in bold in the text (paragraph [3]).

Using a costs diagram, explain how the expansion of the coconut industry could lead to economies of scale (paragraph [4]).

Using real-world examples, discuss the impact of large firms having significant market power.

Explain two economies of scale which may not be available to smaller farms (Text A, paragraph [2]).

Explain two reasons why a monopoly may be considered desirable for an economy.

Explain two reasons why a monopoly may be considered desirable for an economy.

Define the term economies of scale indicated in bold in the text (paragraph [3]).

Define the term economies of scale indicated in bold in the text (paragraph [3]).

Using a costs diagram, explain how the expansion of the coconut industry could lead to economies of scale (paragraph [4]).

Using a costs diagram, explain how the expansion of the coconut industry could lead to economies of scale (paragraph [4]).

Using real-world examples, discuss the impact of large firms having significant market power.

Using real-world examples, discuss the impact of large firms having significant market power.

Explain two economies of scale which may not be available to smaller farms (Text A, paragraph [2]).

Explain two economies of scale which may not be available to smaller farms (Text A, paragraph [2]).

Explain two factors that might give rise to economies of scale for a firm.

Explain two factors that might give rise to economies of scale for a firm.

Using a cost diagram, explain how membership in the common market may allow producers in South Sudan to gain economies of scale (paragraph [6]).

Using a cost diagram, explain how membership in the common market may allow producers in South Sudan to gain economies of scale (paragraph [6]).

Using real-world examples, discuss the impact of large firms having significant market power.

Using real-world examples, discuss the impact of large firms having significant market power.

Using real-world examples, discuss the impact of large firms having significant market power.

Discuss the view that legislation is the best way of dealing with the problem of monopoly power.

Discuss how governments restrict monopoly power.

Discuss the view that governments should always try to prevent the creation of barriers to entry in a market.

Evaluate the view that the use of legislation and regulation by government is the most effective way to control monopoly power.

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the New Zealand Commerce Commission to limit the possible abuse of market power in the supermarket industry in New Zealand. 

Discuss how governments restrict monopoly power.

Discuss how governments restrict monopoly power.

Discuss the view that governments should always try to prevent the creation of barriers to entry in a market.

Discuss the view that governments should always try to prevent the creation of barriers to entry in a market.

Evaluate the view that the use of legislation and regulation by government is the most effective way to control monopoly power.

Evaluate the view that the use of legislation and regulation by government is the most effective way to control monopoly power.

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the New Zealand Commerce Commission to limit the possible abuse of market power in the supermarket industry in New Zealand. 

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the New Zealand Commerce Commission to limit the possible abuse of market power in the supermarket industry in New Zealand. 

Discuss the view that legislation is the best way of dealing with the problem of monopoly power.

Discuss the view that legislation is the best way of dealing with the problem of monopoly power.