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Question 1

Multiple choice - select the correct option

Fixing a price just below the average cost of potential entrants into a market is called:

  1. Price discrimination

  2. Predatory pricing

  3. Cost-plus pricing

  4. Limit pricing

  5. Break-even pricing

Question 2

If an oligopolist raises price it will:

  1. Increase its profits

  2. Reduce its profits

  3. Expect a big change in its revenue

  4. Make entry into the market less likely

  5. Make entry into the market more likely

Question 3

There is clear evidence that the UK supermarket sector is increasingly dominated by a few firms, led by Tesco, Sainsbury’s and ASDA.

  1. How do supermarkets compete with each other? (6)

  2. Explain why UK supermarkets are increasingly dominated by a few large firms. (6)

  3. What are the likely effects of this domination on:

    1. Prices (2)

    2. Profits (2)

    3. Efficiency (2)

    4. Economic welfare (2)

  4. What could the regulators do to limit the power of supermarkets. (4)

Question 4

Assess price and non-price strategies used by major airlines.

See answer