(a)
- Explain what is meant by an economy of scale. [3]
- Explain how economies of scale are likely to affect the price and output of a firm such as the supermarket. [4]
(b)[5]
In the article the supermarket says that it helps the economy. Is this usually one of the aims of large businesses?
(c)[8]
The article says the supermarket ‘acts as a monopsonist’. Analyse what this means and consider whether the article can be used as evidence to support the view that a monopsony is beneficial.