In recent years the prices of many electronic products have fallen as sales have increased. Research to improve the products is expensive but there are large economies of scale in production. Discuss what is likely to happen to the costs, prices of products and market structure in industries where there are large economies of scale.

Mark scheme

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

1. [25] L4 (18-25): for clear explanation of economies of scale; consideration of likely effect on prices and profits as industries become larger and the market more imperfect. Conclusion should be given to a reasoned answer
2. [25] L3 (14-17): for an answer that concentrates more on one side – either economies or the market structure: or a briefer explanation of both parts; a conclusion should still be given
3. [25] L2 (10-13): for a more limited answer probably concentrating on economies. Maximum 11 if no conclusion
4. [25] L1 (1-9): for an answer that has some basic correct facts but includes irrelevancies and errors of theory