An on-demand cloud gaming platform increased its active premium subscribers by 250% over a 3-year period. The platform's share of total digital gaming hours tripled, and its operating profits grew rapidly.
Which one of the following is the most likely explanation for this firm's success?
A low concentration ratio in the industry meant that the platform faced highly fragmented, weak competition.
A low cross-elasticity of demand with traditional console hardware meant that consumers easily switched to the platform when console prices rose.
The platform was able to exploit economies of scale by offering a completely homogeneous product identical to its competitors.
The platform invested in proprietary streaming technology, which created a first-mover advantage and raised barriers to entry.
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.