Examples

Question 1

(OLIGOPOLY) What happened initially with the Microsoft activation merger

Answer 1

Microsoft wanted to merge with activision to develop cloud gaming technology. The CMA said Microsoft would have too much power in a growing industry
Microsoft head said UK was a bad place to do business

Question 2

(OLIGOPOLY) Why was the head of the CMA made redundant

What is the macro & micro evaluation of this

Answer 2

The government said they are too much of a barrier to growth

Macro evaluation: supports the governments heavy focus on growth by favouring business mergers that would lead to growth over other objectives (e.g. consumer interest)

Micro evaluation: The fact that the head of the CMA was made redundant as he prevented too many mergers (specifically Microsoft and activation), ie, looking out for consumer interests, this suggests that the CMA was in fact strict enough on businesses and possibly too strict, and the fact that the government has advocated for less strict regulation could be a form of government failure as they are favouring business growth over the consumer interest.

Question 3

(WAGES) Give an example of an action taken by Goldman Sachs’s showing that gender inequality may be reducing

Answer 3

Goldman Sachs’s have stated its diversity policy has ‘served its purpose’ and they have removed their diversity policy following the USA removing all DEI departments

However it can be argued that the only reason we have got to a point where the pay gap is closing, is due to these policies, and if we return to a free market structure the pay gap may widen further

Question 4

Give an example of firms returning to profit maximisation over other objectives such as the environment

Answer 4

Financial Times:
BP recently slashed renewables spending in pivot back to oil and gas

Question 5

Give an example of how the structure of the free market means regulation may not be needed in an oligopoly market

Answer 5

Aldi & Lidl
Structure of the supermarket industry changed when Aldi & Lidl entered the market. No longer the same Big 4
Other supermarkets have done ‘aldi price match’
Lower prices for consumers

Another example is the ride-sharing market—the entry of firms like Uber and Bolt challenged traditional taxi monopolies, increasing competition, lowering prices, and improving service quality, reducing the need for heavy government regulation.

Also this week Santander rejected £11bn bid from NatWest for UK unit, indicating that firms aren’t just looking for lower AC and higher profits

Question 6

Give an example of the banking industry being more competitive due to the free market (without regulation)

Answer 6

Switch guarantee scheme - yet imperial evidence suggest little effect due to strong brand loyalty in the banking sector

Introduction of online banks due to less barriers to entry & improvements in technology means that sector is more competitive

Question 7

What is an intermediate solution between full on regulation and free market solutions to manage oligopoly behaviour

Answer 7

Increasing market contestability

Altering market conditions to make it more competitive

Creating the threat of entry through removing barriers to entry which will regulate behaviour of existing firms in the market

Question 8

Give 2 examples of increased market contest ability (intermediate between free market & regulation)

Answer 8

E.g. Airline industry:
- Rise of low cost airlines such as Ryanair & easyJet
- EV open skies agreement gave new airlines access to take of and landing spots

E.g. Rise of Uber & Bolt
- Removed the need for some licenses for cab drivers

Question 9

How does elasticity change as you go down on a straight demand curve
Where does a monopoly produce on the curve

Answer 9

The top is more elastic, the bottom is more inelastic
The monopoly produces on the elastic part of the demand curve

Question 10

Give an example of a merger in the mobile market

Answer 10

Vodafone & three (To be finalised in coming months)
O2 and virgin (2021)

Question 11

Why has the gov allowed Vodafone and three to merge despite their huge market share

Answer 11

The condition of the merger is they will spend billions upgrading the uk 5G network

Question 12

How has the Vodafone three merger display regulatory failure

Answer 12

The government may be thinking of the benefit to macro objectives (supply side policies) (5G) rather than the consumer interest

Question 13

What are two concerns with Vodafone and three merging

Answer 13

Increase in concentration ratio since there have been 2 large mergers in the last 5 years (Vodafone and 3 this year and O2 and virgin in 2021)

The trade union unite said the deal could add an extra £300 a year to customers bills and lead up to 1600 jobs being lost

Question 14

Give an example of firms showing
Sales maximisation
Increased market share/market dominance
Social/environmental concerns

Answer 14

Sales maximisation: Netflix kept prices low early on to attract millions of users, then raised prices after securing a large customer base

Increased market share/market dominance:
Aldi grew rapidly by offering low prices and a limited product range, gaining market share from bigger supermarkets.

Social/environmental concerns: Patagonia promotes sustainability by using recycled materials and encouraging product repairs to reduce waste. Its “Don’t Buy This Jacket” campaign exemplified its commitment to reducing overconsumption while building a loyal, values-driven customer base, indicating that, at face value, profit is certainly not their main objective. (Can also argue this is just a marketing strategy)

Question 15

Give two examples of product versioning

Answer 15

Premium petrol
Priority boarding

Question 16

Give 2 examples of price discrimination

Answer 16

-A petrol station offers cheaper petrol on specific days (those with elastic demand would capitalise on this)
- Insurance premiums

Question 17

Give 3 examples of how changes in technology may bring industries closer to the market structure of perfect competition

Answer 17

1 - E-commerce platforms such as amazon and shopify: Lowered barriers to entry for small businesses and independent sellers. Entrepreneurs can also now sell directly to consumers without having to pay for large warehouses to hold stock (drop shipping)
However this also strengthens Amazon and shopify in terms of their oligopoly power as e commerce gets more popular. This means whilst the e commerce sector is becoming closer to perfect competition, the industries facilitating this are becoming more oligopolistic.

2- Price comparison websites: For example booking.com and compare the market.com. This leads to price transparency and encourages competition. Therefore prices within the market will be similar in order for firms to remain competitive. However prices transparency may lead a greater ease in implicit collusion due to a more efficient way in indirectly communicating price.
However, it may be said that only the largest firms appear on price comparison websites, and the firms willing to give up a larger commission on these sites, which tends to be larger firms making more profit , meaning in realistic price comparison websites strengthen an oligopolistic market.

3- The rise of online streaming services: Such as Netflix and Spotify. Makes movie and film industry more competitive. Record labels previously control access to production, promotion and distribution services. No services such as ditto allows independent artists to join the market at little cost, increasing competition. (However more artists may mean the product is becoming less homogeneous due to different genres)
Cinemas also previously control access to films, now licensing agreements between online services such as Netflix and film producers mean greater competition.

Question 18

Give a real example of de - regulation

Answer 18

Laws which introduced competition into the postal services industry

Question 19

Give two examples of tough laws on anticompetitive behaviour

Answer 19

-Companies breaching UK competition rules risk fines of up to 10% of global turnover
- Senior executives can be jailed if negative outcomes occur due to their actions

Question 20

Give 3 real examples of laws which display market liberation

Answer 20

Deregulation of the Bus Industry (1985) – The Transport Act allowed private companies to compete with public transport services outside of London.
Gas Market Liberalization (1996-1998) – The UK opened up the domestic gas market to competition, ending British Gas’s monopoly
The Big Bang occurred on October 27, 1986, when the London Stock Exchange (LSE) was deregulated and became a private limited company leading to increased competition and foreign investment. (fixed commissions removed so firms could compete on price )

Question 21

Give 2 examples of increased market contest ability (intermediate between free market & regulation)

Answer 21

E.g. Airline industry:
- Rise of low cost airlines such as Ryanair & easyJet
- EV open skies agreement gave new airlines access to take of and landing spots

E.g. Rise of Uber & Bolt
- Removed the need for some licenses for cab drivers

Question 22

Give 4 examples of natural monopolies

Answer 22

Water
Gas
Electric (national grid)
Railways

Question 23

Give 2 examples of regulatory (watchdog) bodies

Answer 23

OFWAT
OFCOM

Question 24

Give an example of a failure of a natural monopoly

Answer 24

Thames water
Lack of timely investment in renewing their pipelines leading to waste being released into the ocean causing environmental concerns
in August 2024, Ofwat imposed a £168 million penalty on Thames Water, Yorkshire Water, and Northumbrian Water for routinely releasing sewage into rivers and seas

Question 25

Give an example of diverse shortlisting

Answer 25

Encouraging or mandating diverse candidate pools for hiring or promotion decisions E.g. Pinterest Implementing a Rooney Rule-like Requirement: For every open leadership position, Pinterest required that at least one candidate from an underrepresented background and one female candidate be interviewed

Question 26

Give an example of affordable childcare practices - state some issues

Answer 26

Government has subsidised free nursery places for all 2, 3 and 4 year olds (15hrs a week) Additional means tested 15hrs provided for 3 & 4 year olds Government roll out plan means that eventually all children under 5 will get a free 15 hours (projected September 2025) Criticism: Not funded enough - parents still have to pay for lunch or stationary / not enough free spaces If the government wants immediate effects- why not allow free childcare for all children straight away rather than slow rollout - budget constrains

Question 27

Give an example of a quota to reduce discrimination

Answer 27

Setting benchmarks for women in leadership or specific sectors e.g. As of early 2025, women hold approximately 43% of board seats in the UK's FTSE 350 companies, surpassing the voluntary target of 40% set for the end of 2025, by the FTSE women Leaders Review

Question 28

Which infrastructure projects are designed to help geographical distribution in the UK

Answer 28

HS2 Network north

Question 29

Give an example of poor geographical distribution of income in the UK

Answer 29

Financial services in the city consistently contributes more than 10% if total UK GDP

Question 30

Give 5 changes to the benefits system which took place in march

Answer 30

- Going to be harder to claim PIP , which is a non means tested benefit that supports those who with health conditions that is currently worth £108 a week - There will be a PIP assessment process review - Universal credit basic rate will rise to £775 by 2030 - Disability U.C top ups are going down - New benefit called unemployment insurance will be introduced, which is a merger of job seekers allowance and employment support allowance

Question 31

What is the new benefit that the government introduced in March

Answer 31

New benefit called unemployment insurance will be introduced, which is a merger of job seekers allowance and employment support allowance

Question 32

What pledge did the government make in the SPRING STATEMENT as a means to tackle income inequality

Answer 32

A pledge to hire 400 more HMRC staff to tackle "wealthy offshore non-compliance" - estimated to bring in an extra £500m over five years

Question 33

Give an example of affordable childcare practices - state some issues

Answer 33

Government has subsidised free nursery places for all 2, 3 and 4 year olds (15hrs a week) Additional means tested 15hrs provided for 3 & 4 year olds Government roll out plan means that eventually all children under 5 will get a free 15 hours (projected September 2025) Criticism: Not funded enough - parents still have to pay for lunch or stationary / not enough free spaces If the government wants immediate effects- why not allow free childcare for all children straight away rather than slow rollout - budget constrains

Question 34

Give an example of explicit collusion

Answer 34

OPEC OPEC was formed in 1960 and its 13 current member states hold more than 80% of the world's proven oil reserves

Question 35

What is tax burden projected to be, as mentioned in the spring statement

Answer 35

Tax Burden: Projected to peak at 37.7% of GDP by 2027–28, the highest in decades. ​

Question 36

Describe the trend in minimum wage/National living wage over the last decade, and the change made in the spring statement

Answer 36

Minimum wage has rose every year for the last decade And in the spring statement National Living Wage: Increased by 6.7% to £12.21 per hour, providing a £1,400 annual pay rise for approximately three million workers.

Question 37

State what the government mentioned in the spring statement about housing

Answer 37

Planning Reforms: Aimed at boosting housebuilding to 305,000 homes annually by 2029, with changes expected to add £6.8 billion to the economy. ​

Question 38

What did the government mention in the spring statement about welfare reforms, state the impact of this on poverty

Answer 38

Welfare Reforms: Planned cuts of £4.8 billion by 2029–30, including restrictions on Universal Credit and Personal Independence Payments, particularly affecting younger claimants. Poverty Impact: Welfare cuts are projected to increase relative poverty for 250,000 people, including 50,000 children.

Question 39

Give 2 examples showing how Aldi prioritised market share over profit in its early years

Answer 39

Since opening its first UK store in 1990, Aldi has steadily increased its market share. By 2019, it had reached 8% , and by April 2025, it hit a record 11% Despite this growth, Aldi's profit margins remained low. In 2021, its profit margin fell to an 11-year low of 0.4% due to significant investments in price reductions and pandemic-related costs Low Pricing Strategy: Aldi consistently undercut competitors by approximately 15%, attracting price-sensitive consumers and increasing foot traffic .

Question 40

Give an example of a patent held by a firm in the pharmaceutical industry, acting as a barrier to entry

Answer 40

Pfizer holds a patent for the drug Eliquis, which acts as a barrier to entry for other firms in the anticoagulant market.

Question 41

Give an example of a real industry which is close to the perfect competition market structure

Answer 41

The foreign exchange (forex) market is often cited as a real-world example that closely resembles perfect competition Many buyers and sellers: Millions of participants trade currencies globally—banks, institutions, and individuals. Homogeneous product: A US dollar is the same no matter who sells it. Free entry and exit: Traders can enter and exit the market with few restrictions. Perfect information: Currency prices are publicly available in real-time. No single buyer or seller can influence price: The sheer volume and number of participants make individual price-setting nearly impossible.

Question 42

Give an example of anti discrimination legislation

Answer 42

The Equality Act 2010 is a UK law that protects individuals from discrimination based on characteristics like age, gender, race, disability, and religion.

Question 43

Why might increasing minimum wage as a means to tackle large welfare spending be an effective method

Answer 43

Welfare spending makes up the largest proportion of government spending at 24.9% of total government spending and around 11% of GDP

Question 44

How many people are out of the labour force in the UK (of working age), and what could be done to aid this

Answer 44

As of early 2025, approximately 9.2 million people aged 16 to 64 in the UK are economically inactive—that is, they are not in employment and not actively seeking work. This figure represents about 21.4% of the working-age population. (ONS STAT) Raising minimum wage Tapered benefits system (unemployment insurance) Lower tax rates (increase incentive to work)

Question 45

Give an example of a tax introduced to aid in reducing wealth inequality

Answer 45

Removal of inheritance tax exemptions on agricultural land, introduced in the October 2024 budget. This policy targets the practice where wealthy individuals purchase farmland to exploit tax exemptions, thereby avoiding inheritance tax

Question 46

When was corporation tax cut recently in the UK

Answer 46

From 2010 to 2019 corporation tax was cut every year from 28% to 19% Was then maintained at 19% until 2023, the main rate increased to 25% for companies with profits over £250,000. A small profits rate of 19% was introduced for companies with profits up to £50,000 This adjustment in 2023 marked the first increase in the UK's main corporation tax rate since 1974

Question 47

Which cities is network north planning to connect

Answer 47

Liverpool, Manchester and leeds

Question 48

What is the criticism of the trickle down effect

Answer 48

An OECD report in 2014 provided empirical evidence suggests that the trickle down effect doesn't exist

Question 49

What is the current youth unemployment figure

Answer 49

In December 2024 to February 2025, the UK youth unemployment rate (for 16-24 year olds) was 14.6% which represents a significant increase from the previous year, where the rate was 12.8% 12.8--> 14.6

Question 50

Give a statistic showing severe wealth inequality in the UK

Answer 50

Top 1% of households in the UK own approximately 10% of the nation's total household wealth, which is roughly equal to the combined wealth of the bottom 50% of households

Question 51

Give an example of providing more education and training opportunities to lower income groups as a means to tackle poverty and income inequality

Answer 51

A to B scheme (Lowers effects of occupational immobility) 20% of T levels at home and up to 50% for digital courses which reduces the effects of geographical and occupational immobility

Question 52

Give an example of positive discrimination

Answer 52

Oxbridge grads/PHD's

Question 53

Give an example of productive inefficiencies

Answer 53

Firms using outdated machinery or technology, which may waste materials and time respectively

Question 54

Give an example of second degree PD

Answer 54

- Bulk buying - Loyalty cards making prices cheaper

Question 55

Give an example of third degree PD

Answer 55

-NHS discount - Peak train tickets

Question 56

Give a real example of diseconomies of scale

Answer 56

Tesco's over-expansion in the early 2010s. As the company grew rapidly, it faced: Managerial inefficiencies across its vast network of stores, Slower decision-making, and Higher operating costs in underperforming international markets. This led to falling profits and store closures, showing how growing too large can reduce efficiency

Question 57

Give a real example of economies of scale

Answer 57

Amazon: As Amazon has grown, its per-unit costs for warehousing, delivery, and cloud computing have fallen significantly. It achieves technical economies of scale through automation in fulfilment centres. Its massive buying power allows for bulk discounts from suppliers (purchasing economies). It also spreads R&D and logistics costs across a huge volume of sales globally.

Question 58

Give an example of a trade union which is powerful due to inelastic supply of labour

Answer 58

Financial services union (FSU) Union for bankers analysts etc

Question 59

Which union has the highest membership in the UK

Answer 59

UNISON Represents public service and utility workers in the private and public sector

Question 60

What union are bin men part of

Answer 60

UNITE