Paper 1

Question 1

What are some features of an oligopolist market?

Answer 1

• The existence of price rigidity
• Interdependence of firms
• Competition

Question 2

What are some market failures?

Answer 2

• Externalities
• Merit/demerit goods
• Monopoly
• Public good
• Factor immobility
• Imperfect information
• Inequality

Question 3

What are some advantages of a monopoly?

Answer 3

• Economies of scale
• Profit maximising > govt. revenue
• Innovation (using profits)

Question 4

What are some disadvantages of a monopoly?

Answer 4

• Poor level of service
• No consumer sovereignty
• High prices for low quality service
• Lack of competition leads to low innovation