In 2015, the worldwide equilibrium price of milk decreased. As a result, the number of farms making milk fell. To cut costs, farms became larger and hired fewer but more specialised workers. Because there were fewer farms, competition became weaker, as some large farms gained monopoly power in local areas. Some farm workers moved into other jobs, while others who stayed agreed to lower pay.
(a)[2]
The market-clearing price at which demand equals supply.
(b)[4]
Explain two reasons why a worker may stay in a job even after a cut in pay.
(c)[6]
Analyse how using specialised workers may reduce a firm's average production costs.
(d)[8]
Discuss whether consumers would gain if a firm became a monopoly.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The price at which demand matches supply.” …