Contestable markets

(a) With reference to Extract A, explain one likely impact of the growth of digital markets on allocative efficiency.

(b) With reference to Extract C, examine two effects of increased ‘automation’ on the demand for labour.

(c) With reference to the information provided, discuss whether the price elasticity of demand for video games is elastic or inelastic.

(d) With reference to the information provided, assess whether the market for video game development is contestable.

(e) Discuss the likely benefits of mergers for firms such as Microsoft.

With reference to Extract A, explain one likely impact of the growth of digital markets on allocative efficiency.

With reference to Extract C, examine two effects of increased ‘automation’ on the demand for labour.

With reference to the information provided, discuss whether the price elasticity of demand for video games is elastic or inelastic.

With reference to the information provided, assess whether the market for video game development is contestable.

Discuss the likely benefits of mergers for firms such as Microsoft.

With reference to Figure 1, calculate the three-firm concentration ratio for branded coffee shop chains.

With reference to Figure 2 and your understanding of price elasticity, examine two factors that may cause significant changes in the international price of coffee beans.

Profit maximisation is assumed to be the business objective of most firms. With reference to Extract A, assess whether this is the case for coffee shop owners.

Using a cost and revenue diagram, discuss the likely impact of ‘rising costs’ for coffee shops on their profitability (Extract A, line 2).

With reference to the information provided, discuss whether the coffee shop market is contestable.

Using the information provided, explain the market structure that best describes the hand car wash (HCW) industry in the UK.

Examine two reasons why the demand for HCWs increases during a period when consumer ‘incomes fail to keep up with inflation’ (Extract A line 8).

Discuss the likely effects of changes in the level of migration on firms such as HCWs in the UK. Use a labour market diagram and the information provided to support your answer.

EITHER

Evaluate the microeconomic and macroeconomic factors which determine the number of firms in an industry. Refer to HCWs or another industry of your choice.

Evaluate the microeconomic and macroeconomic effects of increased government intervention in an industry. Refer to HCWs or another industry of your choice.

Write your answer here:

In 2015 JCB, the construction equipment manufacturer, experienced a 6% fall in revenue. This resulted from a reduction in sales of construction equipment to emerging markets.

Draw a cost and revenue diagram to show the likely impact of a reduction in sales of construction equipment on JCB’s profits.

In India JCB has a strong brand image and a 50% share of the market for construction equipment. This means the construction equipment market in India is likely to have a low level of: