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1.5 Perfect competition, imperfectly competitive markets and monopoly

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Question 20

An economist is analyzing four different markets to identify which one exhibits the structural and behavioral characteristics of a perfectly competitive industry in long-run equilibrium. The characteristics of a representative firm in each market are summarized in the table below:

MarketPrice Elasticity of Demand Facing the FirmLong-run Relationship Between Price (PPP) and Marginal Cost (MCMCMC)Long-run Economic Profit
Market PFiniteP=MCP = MCP=MCPositive
Market QInfinite (∞\infty∞)P=MCP = MCP=MCZero
Market RInfinite (∞\infty∞)P>MCP > MCP>MCPositive
Market SFiniteP>MCP > MCP>MCZero

Which market is most likely to be perfectly competitive?

Market P

Market Q

Market R

Market S

1.5 Perfect competition, imperfectly competitive markets and monopoly Questions

  1. A Level
  2. /Economics
  3. /1.5 Perfect competition, imperfectly competitive markets and monopoly