Businesses in one city offer households a similar standard oven-cleaning service.
Table 1 shows information about this market.
| Year 1 | Year 2 | |
|---|---|---|
| Average price per job | £70 | £66 |
| Average cost per job | £54 | £56 |
| Number of suppliers | 9 | 15 |
At the start of Year 3, a comparison website begins displaying every supplier’s price. No licence is needed to enter the market. The cleaning equipment costs £1,500 and can be resold if the business closes.
Using Table 1 and the information above, explain why the average profit per job is likely to fall further in Year 3.
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.