Category: Economics

Big Brum plc, which has a dominant position in its markets, has received notice that it is being investigated under Chapter 1 of the Competition Act 1998.

The following activities have been colluded in by Big Brum plc:

Activity 1 – Limiting production markets
Activity 2 – Agreeing with another organisation to limit competition
Activity 3 – Restricting technical developments

Which of the activities may, individually, have given rise to such a notice being given to Big Brum plc?

Select ONE answer:

1. Activity 1 only
2. Activity 2 only
3. Activity 3 only
4. Activities 1, 2 and 3

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Activity 1 and Activity 3- No (this is an abuse of a dominant position, covered by Chapter Il of the Act). Activity 2 – Agreeing with another organisation to limit competition – Yes
3. Not correct
4. Not correct

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It is reported that two large listed companies recently colluded with each other to fix the price of a product they both sell in the UK market.

Collusion of this type is an example of market failure due to?

Select ONE answer:

1. Inequality of resources
2. External costs
3. Market power
4. Resource immobility

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == >    Collusion is an example of market power exerted by a few suppliers.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Any measures taken by the government to redistribute wealth are a form of government intervention aimed at addressing problems concerned with?

Select ONE answer:

1. Asymmetric information
2. Market imperfection
3. Lack of equity
4. Externalities

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == >    Redistribution of wealth is an attempt to address the lack of equity.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following statements have been made about anti-monopoly legislation and market regulation.

Statement 1 – Anti-monopoly legislation is undertaken to compensate for lack of competition, and market regulation is undertaken to promote competition

Statement 2 – Anti-monopoly legislation is undertaken to promote competition and market regulation is undertaken to compensate for lack of competition

Statement 3 – Anti-monopoly legislation is undertaken to promote competition and market regulation is also undertaken to promote competition

Are these statements true or false?

Select ONE answer:

1. Statement 1. True and Statement 2. False and Statement 3. True
2. Statement 1. True and Statement 2. False and Statement 3. False
3. Statement 1. False and Statement 2. True and Statement 3. True
4. Statement 1. False and Statement 2. True and Statement 3. False

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > The first and third statements are false, but the second statement is true – anti-monopoly legislation favours competition, but where competition is not possible, then market regulation is used to compensate for the lack of competition.

This work is licensed under a Creative Commons Attribution 4.0 International License.

Anti-monopoly laws are based on the proposition that the best way to achieve efficiency and the avoidance of excessive prices is through?

Select ONE answer:

1. Regulation
2. Increased competition
3. Public ownership
4. Oligopoly

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Tending towards a perfect market through increased competition should lead to allocative efficiency and lower prices.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.