AO2 and AO3
- An oligopoly is where there are a few dominant firms, such as Vodacom,
Airtel and Tigo (which have 86\% of the market between them)
- As a result of their dominance, these firms may be able to benefit from economies of scale and therefore enjoy lower average costs. They may pass these lower costs on to consumers in the form of lower prices
- Firms like Vodacom may also be able to afford to use profits for research and development (R&D) which may lead to a better quality telecoms services for consumers
- The firms in the telecoms oligopoly may try to compete in price wars and keeping prices low would benefit the consumer
- They may also offer additional services to consumers who have subscribed to their networks in an attempt to gain market share from competitors
A04
- However, if the telecoms firms have high costs due to competing via non- price competition such as advertising, they may not be able to offer low prices to consumers
- Such costs may also lead to fewer firms in the market. For example Smart
Telecoms had to leave the market because it could not compete with the
larger firms
- This would mean there are fewer firms left to compete for market share and therefore there would be less choice available for consumers
- Even the successful small firms run the risk of being taken over or crowded out by dominant telecoms providers. This may be the case with the merger between Tigo and Zantel
- This may increase the barriers to entry as it will be difficult for new firms to enter the market to compete with the successful, dominant firms, meaning even less choice for consumers
- The firms in the oligopoly may collude in order to restrict choice and/or price competition, again causing a disadvantage to consumers
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
- Demonstrates basic knowledge and understanding by developing relevant points. Limited application of economic terms, concepts, theories and calculations (AO2).
- Information presented will lack selectivity and organisation. Interpretation of economic information will be limited, with a lack of analysis of issues (AO3).
- Only offers one viewpoint, meaning there is an unbalanced and incomplete evaluation, showing limited understanding and awareness (AO4).
Level 2
4-6
- Demonstrates partial knowledge and understanding by developing relevant points. Partial application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate some selectivity and organisation. Interpretation of economic information will be good, with some analysis of issues (AO3).
- Offers more than one viewpoint but the argument may lack balance, leading to an evaluation that may not demonstrate full understanding and awareness (AO4).
Level 3
7-9
- Demonstrates clear knowledge and understanding by developing relevant points. Appropriate application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate excellent selectivity and organisation. Interpretation of economic information will be excellent, with a thorough analysis of issues (AO3).
- Offers more than one viewpoint. The argument is well balanced and coherent, leading to an evaluation that demonstrates full understanding and awareness (AO4).
