Edexcel A Level Economics A
Edexcel A Level Economics A 3.6 Government Intervention Exam Questions
Free Edexcel A Level Economics A exam questions on 3.6 Government Intervention, with mark schemes. Covers competition policy, regulation of monopoly and the impact of intervention.
3.6 Government Intervention exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
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Edexcel A Level Economics A 9EC0 Flashcards (Anki & Quizlet)
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Use them on Anki or Quizlet, then test yourself with the questions on this page.
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About Edexcel A Level Economics A 3.6 Government Intervention
3.6 asks how the government controls the power of large firms and protects competition. Questions often ask you to evaluate regulation of a named industry.
What you need to know
- Purpose of intervention To control mergers, monopolies and monopsonies, and to promote competition and contestability.
- Methods Price regulation (RPI - X and RPI + K), profit regulation, quality standards, performance targets and the Competition and Markets Authority's powers.
- Promoting competition Deregulation, competitive tendering for government contracts, and privatisation.
- Impact and limits Effects on prices, profit, efficiency, quality and choice, plus regulatory capture and asymmetric information.
Common mistakes in 3.6 Government Intervention
- Confusing RPI - X with a price freeze.
- Assuming privatisation always increases competition.
- Ignoring regulatory capture when evaluating regulation.
- Forgetting to name the CMA as the UK competition authority.
Try three 3.6 Government Intervention exam-style questions
1. Explain how RPI - X price regulation works. (3 marks)
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The regulator caps price rises at the rate of inflation (RPI) (1) minus an efficiency factor X (1), forcing the firm to cut costs in real terms to maintain profit (1).
2. Define regulatory capture. (2 marks)
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When a regulator acts in the interests of the firms it regulates (1) rather than the interests of consumers or society (1).
3. Explain one way the Competition and Markets Authority can promote competition. (2 marks)
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It can investigate and block mergers (1) that would substantially reduce competition, protecting consumers from higher prices (1).
3.6 Government Intervention FAQs
What does Edexcel A Level Economics 3.6 cover?
Government intervention to control mergers, monopolies and monopsonies, promote competition and contestability, and the impact and limits of intervention.
What is the difference between RPI - X and RPI + K?
RPI - X forces real price cuts through efficiency gains. RPI + K allows price rises above inflation to fund investment, common in the water industry.
How should I evaluate competition policy?
Consider regulatory capture, information gaps between firm and regulator, costs of regulation and possible unintended consequences.
Revise this topic with flashcards: Edexcel A Level Economics A 9EC0 Flashcards, with mark scheme answers for Anki and Quizlet.
