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1.5 Competitive and concentrated markets

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Question 70

A firm is considering entering the UK market for manufacturing glass bottles. Before it can produce, it must spend £180 million on a purpose-built factory and equipment. If the firm later leaves the market, these assets could be sold for £30 million.

a.

Calculate the amount of the firm's spending that could not be recovered if it left the market.

[1]
b.

Explain how the amount calculated in part (a) could help existing glass bottle producers retain market power.

[2]
Markscheme

1.5 Competitive and concentrated markets Questions

  1. GCSE
  2. /Economics
  3. /1.5 Competitive and concentrated markets

149 exam-style questions on AQA GCSE Economics 1.5 Competitive and concentrated markets, covering 1.5.1a The range of market structures, 1.5.1b Distinguishing between market structures, 1.5.2a Characteristics of a competitive market, 1.5.2b How producers operate in competitive markets, 1.5.2c The economic impact of competition, 1.5.3a Characteristics of a non-competitive market, 1.5.3b How producers operate in non-competitive markets, 1.5.3c Monopoly and oligopoly, 1.5.4a The labour market and wage determination, and 1.5.4b Gross and net pay. Each one has a worked solution and a mark scheme showing where the marks go.

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