Document page
Economics IGCSEPDF 76
118 pagesrevision 46932
PDF 76
Page image rendered from the stored file at 110 dpi; it sharpens as you zoom. Outlines are placed from each region’s stored position on the page (612 × 792 pt).
readable
Source of this text: embedded text layer. The better of the embedded text and OCR is kept.
●
●
Explain
types of
Analyse the reasons why
established firm.
Unique Product: The product or
service has no close substitutes.
Monopolies
are often large and can fully exploit
,
leading to low average costs and
potentially lower prices for
consumers than if multiple small
firms existed.
Research and Development
(R&D): The high profits earned can
be reinvested into R&D to develop
new products or more efficient
production methods, which benefits
society in the long run.
Disadvantages of Monopoly
a manufacturing firm is likely to incur.
Discuss the advantages and disadvantages for consumers of a product being sold in a
monopoly market compared to a competitive market.
might not be the main objective for a newly
● Higher Prices: Since there is no
competition, the monopolist can
restrict output and charge a higher
price than a competitive firm,
reducing consumer surplus and
welfare.
● Lower Output: The monopolist
supplies less output than a
competitive market, leading to an
inefficient allocation of resources
for society.
● Reduced Choice: Consumers have
a limited choice because only one
firm supplies the product.
● Incentive to be Inefficient: Without
competitive pressure, the monopolist
may become complacent, leading to
poor quality products or a lack of
innovation.
two
fixed costs
Advantages of Monopoly
● EconomiesofScale:
technical economies of scale
profit maximisation
Fixed Cost 1: Rent or Lease Payments
Note: Diagrams are not required for this
section.
Solved Answers (Note Form)
Q1:TwoTypesofFixedCosts(4Marks)
Unsolved Past Paper Questions
Question 1 (4 Marks)
Question 2 (6 Marks)
Question 3 (8 Marks)
●