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1.5 Perfect competition, imperfectly competitive markets and monopoly

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Question 28

For over a decade, a dominant enterprise software corporation maintained an 85% market share in project management suites, protected by high customer switching costs. Recently, a wave of open-source collaborative platforms utilizing decentralized, AI-driven workflow automation has emerged. These platforms bypass traditional licensing fees, attract a massive self-sustaining developer base, and are rapidly eroding the incumbent's market share, rendering its legacy software suite obsolete.

Which concept in competitive market dynamics does this process of market entry and technological displacement best illustrate?

A

Sunk cost recovery

B

X-inefficiency

C

Creative destruction

D

First-mover advantage

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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