Indonesia's biggest aviation company is a public corporation that began production in 1976. It makes use of a comparatively large amount of capital goods and holds a monopoly over aircraft construction in Indonesia. For some time it has produced parts for overseas firms, but it is now attempting to market aircraft to other countries. That means it is competing in a market where most firms are public limited companies.
(a)[2]
Identify who owns a public corporation and who owns a public limited company.
(b)[4]
Explain why fixed costs are high in the aircraft-making industry.
(c)[6]
Analyse the factors shaping a firm's demand for capital goods.
(d)[8]
Discuss whether product quality is more likely to be higher in a monopoly or in a perfectly competitive market.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Government-owned public corporation” …