Edexcel A Level Economics B
Edexcel A Level Economics B 4.2 Market Power and Market Failure Exam Questions
Free Edexcel A Level Economics B exam questions on 4.2 Market Power and Market Failure, with mark schemes. Covers the costs of monopoly power and competition policy.
4.2 Market Power and Market Failure 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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A Level Economics Flashcards
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Pick your exam board, then test yourself with the questions on this page.
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About Edexcel A Level Economics B 4.2 Market Power and Market Failure
4.2 explains why market power can be a form of market failure and how regulators respond. Expect evaluation of competition policy.
What you need to know
- Costs of market power Higher prices, lower output, less choice, allocative inefficiency and possible X-inefficiency.
- Possible benefits Economies of scale and supernormal profit funding research and innovation.
- Competition policy The CMA can investigate mergers, ban anti-competitive behaviour and impose remedies.
- Regulation Price caps, quality standards and performance targets for utilities and other monopolies.
Common mistakes in 4.2 Market Power and Market Failure
- Only giving the costs of monopoly without any benefits.
- Forgetting regulatory capture.
- Not naming the CMA.
Try three 4.2 Market Power and Market Failure exam-style questions
1. Explain one way monopoly power can harm consumers. (2 marks)
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The monopolist can restrict output and raise prices above competitive levels (1), reducing consumer surplus and choice (1).
2. Explain one potential benefit of a large firm with market power. (2 marks)
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Supernormal profit can fund research and development (1), leading to innovation and better products over time (1).
3. Explain one power of the Competition and Markets Authority. (2 marks)
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It can block mergers that would substantially reduce competition (1), protecting consumers from higher prices (1).
4.2 Market Power and Market Failure FAQs
What does Edexcel A Level Economics B 4.2 cover?
The costs and benefits of market power, competition policy and regulation.
What is regulatory capture?
When regulators act in the interests of the firms they regulate rather than consumers.
How should I evaluate competition policy?
Weigh lower prices and more choice against lost economies of scale, cost of enforcement and information gaps.
Revise this topic with flashcards: A Level Economics Flashcards, with mark scheme answers for Anki and Quizlet.
