A low-cost firm enters a competitive household-goods market. Existing firms cut prices, invest in labour-saving equipment and reorganise production. Which pair of short-run effects is most likely?
Consumers gain lower prices, while incumbent firms' profit margins widen
Consumers gain lower prices, while some incumbent workers may face job insecurity
Consumers lose choice, while incumbent firms' profit margins narrow
Consumers lose choice, while incumbent workers are guaranteed secure jobs
149 exam-style questions on AQA GCSE Economics 1.5 Competitive and concentrated markets, covering 1.5.1a The range of market structures, 1.5.1b Distinguishing between market structures, 1.5.2a Characteristics of a competitive market, 1.5.2b How producers operate in competitive markets, 1.5.2c The economic impact of competition, 1.5.3a Characteristics of a non-competitive market, 1.5.3b How producers operate in non-competitive markets, 1.5.3c Monopoly and oligopoly, 1.5.4a The labour market and wage determination, and 1.5.4b Gross and net pay. Each one has a worked solution and a mark scheme showing where the marks go.