Indonesia’s biggest aviation company is a state-owned corporation that began manufacturing in 1976. It makes intensive use of capital goods and holds a monopoly over aircraft production in Indonesia. Although it has long produced components for overseas firms, it is now attempting to market aircraft to other countries. As a result, it must compete in a market where most firms are public limited companies.
(a)[2]
Identify the owner of a public corporation and the owner of a public limited company.
(b)[4]
Explain why fixed costs are high in the aircraft-making industry.
(c)[6]
Analyse the factors that determine a firm’s demand for capital goods.
(d)[8]
Discuss whether product quality is likely to be greater in a monopoly market or in a perfectly competitive market.
Worked solution & mark scheme
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