monopoly (L10)

Question 1

monopoly

Answer 1

market with a single seller of a good

Question 2

name the official body in the UK with responsibility for monitoring monopoly markets

Answer 2

CMA

competition and markets authority

Question 3

assumptions of the monopoly model

Answer 3

single seller of a good
no substitutes for the good
barriers to entry into and exit the from the market
firms aim to maximise profit

Question 4

how are firms able to make sure profits aren’t competed away?

Answer 4

other firms are attracted by the supernormal profit but there are still high barriers to entry

Question 5

what does the size of profit depend on?

Answer 5

the relative position of the market demand curve and the position of the cost curves.

Question 6

reasons for geographic immobility of labour

Answer 6

in the UK there’s a high rate of owner-occupied housing who wouldn’t want to move. Council house tenants would find it hard to relocate to another area as they’d have to return to the bottom of the waiting list tier housing.
Information problems-easier to find jobs in the local area.

Question 7

why has international mobility of labour increased in recent years

Answer 7

expansion of the EU in 2004
the single market measures of 1992 was to allow free movement of people, goods, services and capital within the EU leading to large waves of immigration from Eastern Europe. eg Poland, because of the wage differential between countries.

Question 8

what causes occupational immobility of labour

Answer 8

they may require retraining which firms may underprovide due to the free rider problem. the UK is moving away from manufacturing and towards service sector activities which means people needed to be occupationally mobile.
They may not have enough information to enable them to judge the benefits from occupational mobility.