Cambridge International A Level · Economics (9708)

Different market structures: Practice Questions

5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Different market structures.

10 questions23 marksFree, no account

Question 1

1 mark

In the context of oligopoly, what is the primary reason why firms often engage in non-price competition?

Question 2

1 mark

In the context of market structures, how is the concentration ratio calculated?

Question 3

1 mark

In a contestable market, even a firm with a high market share may behave like a firm in a competitive market. What is the primary reason for this behavior?

Question 4

1 mark

In a monopolistically competitive market, which statement describes the long-run equilibrium for a firm?

Question 5

1 mark

In an oligopoly, firms often prefer non-price competition. Which of the following is a primary reason for this behavior according to the kinked demand curve model?

Question 6

3 marks

State the condition for allocative efficiency and explain why a profit-maximising monopoly usually fails to achieve this.

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Question 7

4 marks

Explain why a firm in perfect competition is described as a price taker, using the concept of price elasticity of demand for its individual output.

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Question 8

5 marks

In the context of the Prisoner’s Dilemma, explain why two firms in an oligopoly might end up in a non-cooperative equilibrium despite the potential for higher profits through collusion.

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Question 9

2 marks

Define the term concentration ratio and explain why a high concentration ratio is a characteristic of an oligopolistic market structure.

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Question 10

4 marks

(a) Distinguish between price competition and non-price competition.
(b) Explain why non-price competition is a more common feature of oligopoly than of perfect competition.

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