Practise competition-regulation questions by explaining blocked mergers or easier market entry using monopoly power and consumer choice.
When a firm increased its prices, many consumers stopped buying its products.
In April 2023, the Competition and Markets Authority (CMA), the competition regulator in the UK, prevented the purchase of Activision by Microsoft. Microsoft already controlled about 60-70% of the market for online video gaming.
Explain one reason why the CMA may have made this decision.
AO2 3 marks
Award 1 mark for identifying a relevant reason
Award 1 mark for developing the reason
Award 1 mark for the response being in context
- In order to prevent monopoly power (1) and so promote competition (1) as a firm with over 60% of the market may be less likely to innovate (1)
Accept any other appropriate response
(3)
Question
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With reference to the data above and your knowledge of economics, analyse how an increase in demand for furniture made of wood may affect the demand for woodcutters.
Indicative content