A-LevelEconomicsThe price system and the microeconomy9708/33 · Oct/Nov 2018 · Q111 Mark

The diagram shows a firm's marginal and average cost curves. The firm enters a collusive agreement with other firms in the industry. It is agreed that each firm will charge a common price, OP, and will restrict the level of its output to a production quota set by the industry cartel. The firm is allocated a production quota, Oq. [Figure 11.1] The firm decides to cheat in order to maximise its profits. What is its short-run increase in profits? A PGKL B PHJL C PHJL minus PGNM D PGKL minus LKNM

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Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

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Topic: The price system and the microeconomy, A-Level Economics (syllabus 9708). Structured question, 1 mark.
Source: A-Level Economics, Oct/Nov 2018 Paper 3 Variant 3, question 11.

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