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Date November 2018 Marks available 15 Reference code 18N.1.HL.TZ0.2
Level Higher level Paper Paper 1 Time zone Time zone 0
Command term Discuss Question number 2 Adapted from N/A

Question

Explain why prices tend to be relatively rigid in oligopolistic markets.

[10]
a.

Discuss whether an oligopolistic firm should collude rather than compete.

[15]
b.

Markscheme

Answers may include:

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.

a.

Answers may include:

Discussion may include: consideration of the arguments in favour of collusion – economic (abnormal) profits (which can be re-invested in research and development and/or distributed to the shareholders); consideration of the arguments in favour of competition: lower prices and higher quantity for consumers, improved product quality/variety, increased market share for the competing firm(s), improved allocative and/or productive efficiency, difficulties of maintaining cartel structures due to the incentive of cartel members to cheat.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

NB Definitions, theory, and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part B.

b.

Examiners report

[N/A]
a.
[N/A]
b.

Syllabus sections

Last exams 2021 » Section 1: Microeconomics » 1.5 Theory of the firm and market structures (HL only) » Oligopoly » Open/formal collusion
Last exams 2021 » Section 1: Microeconomics » 1.5 Theory of the firm and market structures (HL only) » Oligopoly » Non-collusive oligopoly
Last exams 2021 » Section 1: Microeconomics » 1.5 Theory of the firm and market structures (HL only) » Oligopoly
First exams 2022 » Unit 2: Microeconomics » 2.11 Market failure—market power (HL only) » 2.11.7 Oligopoly
Last exams 2021 » Section 1: Microeconomics » 1.5 Theory of the firm and market structures (HL only)
First exams 2022 » Unit 2: Microeconomics » 2.11 Market failure—market power (HL only)
Last exams 2021 » Section 1: Microeconomics
First exams 2022 » Unit 2: Microeconomics
First exams 2022
Last exams 2021

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