MYTUTOR SUBJECT ANSWERS

236 views

In February 2013, the proposed takeover by Barr of Britvic was referred to the Competition Commission for investigation. There were likely to have been concerns that the takeover would lead to...

(Barr and Britvic are two of the three largest soft drink firms in the UK.)

economies of scale

B an increase in consumer surplus

C a decrease in contestability

a reduction in external economies of scale

E a signal for more firms to enter the industry

This is an example of a 4 mark question, where one mark is awarded for the correct multi-choice answer and 3 for further explanation. 

This question covers mergers between firms and competition in the market. The Competition Commission aims to promote competition in the market and protect consumer interest. Therefore, they would want to investigate if there is indication in the market of a reduction in competition. Once you understand this the obvious multi-choice answer would be 'C', as clearly a decrease in contestability would warrant investigation. 

Your explanation would be awarded marks, firstly, for giving any relevant definitions, such as defining contestability (not the same as competitiveness!) or stating the role of the Competition Commission. You should then go on to explain why this merger would reduce contestability and why that would be bad for the consumer i.e. why is the answer C. 

Contestability refers to the barriers of entry in a market. If contestablility has reduced then barriers to entry have increased. Barr and Britvic's larger market share may be allowing them to access cost advantages from economies of scale which acts as a barrier to other firms in the market. This lack of competition allows Barr and Britvic to raise prices, at a cost to the consumer. Therefore, the Commission may want to investigate this merger. 

The above is an example of how you may answer that question. However, even if you weren't sure and chose the wrong option, you could still get 3 marks. With any question involving mergers and the Competition Commission you can pick up quick marks by stating the type of merger (horizontal integration in this case) and the role of the Commission. 'Knock-out' marks can be gained by justifying why one of the options cannot be the correct answer. For example, 'E' would result in an increase of competition in the market, so wouldn't result in investigation. These are usually left till the end of your answer but are very helpful  if you're lost, or want to make sure you've secured full marks.

Brodie W. A Level Economics tutor, A Level Maths tutor, GCSE Maths tutor

5 months ago

Answered by Brodie, an A Level Economics tutor with MyTutor


Still stuck? Get one-to-one help from a personally interviewed subject specialist

62 SUBJECT SPECIALISTS

£20 /hr

Aimee F.

Degree: Economics (Bachelors) - Leeds University

Subjects offered: Economics, Maths+ 2 more

Economics
Maths
Further Mathematics
-Personal Statements-

“Hi, I'm Aimee and I study Economics at the University of Leeds. I am happy to help students in Economics and Math as they are two subjects I really love. I am patient and understanding and will happily go through things as many times ...”

£20 /hr

Dan M.

Degree: Economics (Bachelors) - Durham University

Subjects offered: Economics, Maths+ 1 more

Economics
Maths
Geography

“About me: I am a first year economics student at durham university, and I am really enjoying learning more and more about my favourite subject. I hope that I instill some of my passion for learning into all of my pupils. I have experi...”

MyTutor guarantee

£24 /hr

Nicolo G.

Degree: BSc Government and Economics (Bachelors) - LSE University

Subjects offered: Economics, Maths+ 2 more

Economics
Maths
History
Biology

“I am currently a student of economics and government at the London School of Economics. I developed a passion for economics during my IB diploma studies and I hope I will be able to instill that passion in you as well. I am very patien...”

About the author

Brodie W.

Currently unavailable: for regular students

Degree: Economics (Bachelors) - Durham University

Subjects offered: Economics, Maths

Economics
Maths

“About Me I am a second year economics student from St Aidan’s College, Durham University . Online tutoring is a new experience for me, but I am as keen to learn as I hope you are. I havepassion for all things economics and maths relate...”

You may also like...

Posts by Brodie

A circle C with centre at the point (2, –1) passes through the point A at (4, –5).....

In February 2013, the proposed takeover by Barr of Britvic was referred to the Competition Commission for investigation. There were likely to have been concerns that the takeover would lead to...

Other A Level Economics questions

What is market failure?

How can the division of labour affect productivity?

Do only monopolies have monopoly power?

Explain what you understand by the Lorenz Curve and Gini Coefficient.

View A Level Economics tutors

Cookies:

We use cookies to improve our service. By continuing to use this website, we'll assume that you're OK with this. Dismiss

mtw:mercury1:status:ok