Government Intervention in Markets | Edexcel A-Level Economics A (9EC0)
Government Intervention in Markets
- 41 questions
- 3 subtopics
- Theme 3: business behaviour and the labour market
- Paper 1 and Paper 3
Covers what a government does about market power: controlling mergers, regulating price, profit and quality, opening markets to competition, and the limits on what regulation can achieve..
It covers controlling mergers, and price, profit and quality regulation, deregulation, tendering, privatisation and nationalisation and the impact of government intervention.
Sample questions from Government Intervention in Markets
Answer each one closed book first, then open the answer.
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Controlling mergers, and price, profit and quality regulation
What does it mean when a merger is approved with conditions?
Show the answer
The merger can proceed but with requirements attached, such as divestment of certain assets, to address competition concerns. -
Controlling mergers, and price, profit and quality regulation
Why might profit regulation reduce productive efficiency in monopoly firms?
Show the answer
It may reduce incentives for cost efficiency if firms are guaranteed a certain profit level regardless of their performance. -
Deregulation, tendering, privatisation and nationalisation
What benefits can competitive tendering bring to government and public services?
Show the answer
It can reduce costs to government and improve service quality by selecting the most efficient provider. -
Deregulation, tendering, privatisation and nationalisation
Give three methods government may use to restrict monopsony power.
Show the answer
Minimum wage legislation, fair trading requirements, and limits on buyer concentration. -
The impact of government intervention
How can government intervention improve dynamic efficiency?
Show the answer
By funding research and development or protecting intellectual property rights, which incentivises innovation. -
The impact of government intervention
Why does regulatory capture limit the effectiveness of government intervention?
Show the answer
Because regulators may set rules that benefit incumbent firms rather than consumers or potential competitors.
The 3 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Controlling mergers, and price, profit and quality regulation | Recall questions on how a regulator handles a proposed merger, and on price capping, profit regulation, quality standards and performance targets. | 11 |
| Deregulation, tendering, privatisation and nationalisation | Recall questions on deregulation, competitive tendering and privatisation as ways to promote competition, restricting monopsony power, and nationalisation as a way to protect suppliers and employees. | 11 |
| The impact of government intervention | Recall questions on the effect of intervention on prices, profit, efficiency, quality and choice, and on regulatory capture and asymmetric information as limits. | 19 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
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