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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?

A

Market P

B

Market Q

C

Market R

D

Market S

Markscheme

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

136 exam-style questions on AQA A Level Economics 1.5 Perfect competition, imperfectly competitive markets and monopoly, covering 1.5.1 Market structures, 1.5.2 The objectives of firms, 1.5.3 Perfect competition, 1.5.4 Monopolistic competition (A-level only), 1.5.5 Oligopoly (A-level only), 1.5.6 Monopoly and monopoly power, 1.5.7 Price discrimination (A-level only), 1.5.8 The dynamics of competition and competitive market processes, 1.5.9 Contestable and non-contestable markets (A-level only), 1.5.10 Market structure, static efficiency, dynamic efficiency and resource allocation (A-level only), and 1.5.11 Consumer and producer surplus (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.

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