1 → (b) · 2 → (b) · 3 → (c) (40 + 25 + 15 = 80%) · 4 → (b) · 5 → (b) · 6 → (d).
A — Section A — answers
1 → (b) · 2 → (b) · 3 → (c) (40 + 25 + 15 = 80%) · 4 → (b) · 5 → (b) · 6 → (d).
B — Section B — indicative content
Key terms
What examiners are looking for
1. (4) A barrier such as patents (legal protection stopping rivals copying) or a strong brand (consumer loyalty raising the cost of entry) — applied to GlobalCo's 70% share. 2. (6) A monopoly diagram: output where MC = MR, price read up to AR, with P > AC giving a shaded supernormal-profit rectangle that barriers protect long-run. 3. (10) A price cap lowers price toward the competitive level → gains for consumers and better allocative efficiency, lower supernormal profit. Evaluate: risk of weaker quality/investment (dynamic efficiency), regulatory capture and information gaps, and the difficulty of setting the cap correctly — the judgement depends on how the cap is set and how contestable the market is.
C — Section C — essay plans
Evaluation
Top-band ingredients
Essay 1 (monopoly & consumers): analyse higher price, restricted output and allocative inefficiency (monopoly diagram). Evaluate with economies of scale (natural monopoly → lower prices), dynamic efficiency from R&D, price discrimination widening access, and contestability. Conclude: it depends on whether economies of scale are passed on and how contestable the market is.
Essay 2 (minimum wage & poverty): analyse higher pay reducing in-work poverty (minimum-wage diagram). Evaluate the unemployment risk if labour demand is elastic or the wage is set too high, the monopsony case (raises pay and jobs), and that the unemployed gain nothing. Conclude on elasticity, the level set, and market structure.
Essay 3 (oligopoly & consumers): contrast the harm of collusion/high barriers (high prices) with the benefits of fierce non-price competition and innovation funded by profits. Evaluate using game theory (the incentive to cheat undermines cartels) and contestability. Conclude: it depends on collusion vs competition.
Exam tip
Final reminder
In every 20-marker: define → analyse with a labelled diagram → evaluate with MICE → justified conclusion. For Unit 3, the conclusion almost always turns on contestability, barriers to entry, or market structure.
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