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3.4 Market Structures and
Contestability
(Edition 1)
Time: 60 minutes
Maximum marks: 50
Name
Centre Name
, Edexcel A Level Economics (A)
Unit Assessment – 3.4 Market Structures and
Contestability
Section A
ANSWER ALL THE QUESTIONS
1a In January 2018, Easyjet was offering the following prices for a one-way flight from London Gatwick
Airport to Faro in Portugal at around midday:
Date of flight Price
Tuesday 15 May £92.79
Saturday 4 August £298.82
The most likely explanation of this pricing strategy is:
A there is a difference in price elasticity of demand in May and August. o
B more spare capacity on flights in August than in May. o
C an expectation of better economic conditions in August. o
D different costs of flying planes in May and August. o
(1 mark)
1b British Sugar buys almost the entire sugar beet crop produced in the UK. This is an example of:
A monopoly power o
B producer surplus o
C price elasticity of supply o
D monopsony power o
(1 mark)
1c Yumm and Grillers are two restaurant chains operating in a duopoly, and their revenues (when they
sell set menus) are shown in the matrix below. Explain one reason why a collusive agreement
between them to price at £10 may break down.
Yumm set menu £7.50 Yumm set menu £10.00
Grillers set menu £7.50 Grillers earns £850,000
Both earn £500,000
Yumm earns £300,000
Grillers set menu £10.00 Grillers earns £300,000
Both earn £750,000
Yumm earns £850,000
(3 marks)
Page 2 Edexcel A Level Economics (A) Unit Assessment www.tutor2u.net/economics
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