Syllabus: AQA - AS and A Level Economics
Module: 3.1.4 Competitive and Concentrated Markets
Lesson: 3.1.4.4 Monopoly and Monopoly Power

Introduction

This article supports the delivery of AQA’s AS and A Level Economics specification, specifically topic 3.1.4.4: Monopoly and Monopoly Power, under the broader heading of Competitive and Concentrated Markets.

Students are expected to understand how monopolies form, how they behave, and the impact they have on consumers, producers, and overall market efficiency. Teaching this topic well is crucial for developing students’ ability to evaluate market structures and to critique real-world market outcomes using economic models.

This guide is designed for teachers, SLT, careers leads, and headteachers seeking curriculum-aligned, exam-relevant, and real-world connected support for delivering this section of the syllabus.

Key Concepts

According to the AQA specification, students must be able to:

• Define monopoly and understand the characteristics of monopoly power.

• Explain the sources of monopoly power (e.g. barriers to entry, economies of scale, legal protections, brand loyalty).

• Analyse the potential advantages of monopoly (e.g. economies of scale, research and development, dynamic efficiency).

• Analyse the potential disadvantages of monopoly (e.g. higher prices, lack of choice, productive and allocative inefficiency).

• Evaluate government intervention in monopolistic markets (e.g. regulation, nationalisation, competition policy).

• Use diagrams to illustrate monopoly behaviour – particularly how monopolists maximise profit where MC = MR.

• Critically assess how monopoly outcomes compare to those in perfectly competitive markets.

This topic builds on prior knowledge of cost curves, price mechanisms, and efficiency, and links forward to policy discussions around market failure and regulation.

Real-World Relevance

This topic resonates strongly with current business and policy debates:

• Tech Giants: Companies like Google, Amazon, and Meta are frequently scrutinised for their market dominance and alleged monopolistic practices. Discussions around digital monopolies, data control, and anti-competitive behaviour provide up-to-date, engaging case studies.

• Utilities and Transport: In the UK, regulated monopolies like Thames Water and Network Rail offer rich examples of state-monitored monopolies. Students can explore the balance between efficiency and public interest.

• Pharmaceuticals: Patent protection gives firms temporary monopoly power. Students can investigate how this affects drug pricing, innovation, and global health equity.

Use these examples to challenge students to think like economists – weighing benefits against costs and questioning who gains and who loses from monopoly power.

How It’s Assessed

The AQA exam includes multiple types of questions that test this topic:

• Data Response: Students may be given a case study (e.g. about a dominant firm or regulatory intervention) and asked to analyse or evaluate it.

• Essay Questions: These often ask students to evaluate monopoly power, using both theory and examples. Expect command words like ‘analyse’, ‘evaluate’, ‘discuss’, and ‘to what extent’.

• Diagram Questions: Students may need to draw and explain monopoly diagrams showing profit maximisation (MC = MR), or compare monopoly outcomes to perfect competition.

Assessment tips:

• Use real-life examples to support evaluative answers.

• Be precise with diagrams – label all curves clearly.

• Encourage students to apply models flexibly, not just memorise them.

Enterprise Skills Integration

Teaching monopoly and monopoly power naturally supports enterprise education and active learning:

• Decision-making: Students evaluate pricing, output, and market strategies through the lens of a monopolist.

• Problem-solving: Case studies ask students to weigh regulatory options, balance innovation with fairness, and assess real-world market outcomes.

• Critical Thinking: Monopoly discussions inherently require evaluating trade-offs – a core skill in both economics and business leadership.

Enterprise Skills Business Simulations can enhance this topic by placing students in the role of decision-makers in a concentrated market, allowing them to feel the tension between profit motives and ethical considerations.

Careers Links

This topic links directly to Gatsby Benchmarks 4, 5 and 6, especially through real-world case analysis and simulation-based learning.

Related roles and sectors include:

• Economist (government or private sector)

• Competition Policy Analyst

• Financial Regulator

• Market Analyst

• Corporate Strategy Consultant

The economic principles explored here are foundational to understanding corporate behaviour, public policy, and consumer welfare – essential knowledge across the finance, legal, public policy, and business sectors.

Enterprise Skills’ simulations support Gatsby Benchmarks 5 and 6 by giving students direct experiences of business decision-making and exposing them to real-world business dynamics.

Teaching Notes

Common pitfalls to watch for:

• Misunderstanding monopoly power: Students often confuse monopoly with 100% market share. Clarify that monopoly power can exist with lower shares if barriers to entry are strong.

• Misusing diagrams: Reinforce correct use of MC=MR for profit maximisation and distinguish between short-run and long-run implications.

• Over-simplifying evaluation: Encourage students to go beyond “monopolies are bad” – push for nuanced analysis including dynamic efficiency and consumer surplus.

Plug-and-play ideas:

• Use a Skills Hub worksheet to model monopoly diagrams alongside real-life examples.

• Simulate a regulator vs. monopolist debate in class – students role-play CMA, consumer groups, and firms.

• Drop in a mini case study (e.g. Ofcom vs. BT, or CMA and the Microsoft–Activision deal) to ground abstract models in current affairs.

Extension activities:

• Explore the economics of digital platforms – how do network effects create monopoly-like conditions?

• Compare monopoly power in different market structures using Enterprise Skills’ competitive simulations.