In October 2022, Apex Broadband announced record operating surpluses for the third consecutive year from providing fiber-optic internet connection to residential households in Westland. Just four months after this announcement, Apex Broadband implemented a price increase of 15%. This pricing action suggests that the firm might be exploiting its dominant market power.
From the information given, which one of the following is most likely to be correct?
The 15% price increase is a structural barrier to entry in the broadband market.
Apex Broadband is allocatively efficient because it generated record operating surpluses for three consecutive years.
Broadband services supplied by Apex Broadband have a high negative externality in consumption.
There is a high concentration ratio in the market for residential broadband services in Westland.
136 exam-style questions on AQA A Level Economics 1.5 Perfect competition, imperfectly competitive markets and monopoly, covering 1.5.1 Market structures, 1.5.2 The objectives of firms, 1.5.3 Perfect competition, 1.5.4 Monopolistic competition (A-level only), 1.5.5 Oligopoly (A-level only), 1.5.6 Monopoly and monopoly power, 1.5.7 Price discrimination (A-level only), 1.5.8 The dynamics of competition and competitive market processes, 1.5.9 Contestable and non-contestable markets (A-level only), 1.5.10 Market structure, static efficiency, dynamic efficiency and resource allocation (A-level only), and 1.5.11 Consumer and producer surplus (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.