11 mark
In some industries, a monopoly controls output and prices.
What is the most likely impact of this on consumers?
higher prices
higher profits
higher taxes
more choice
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Market Structure (CIE IGCSE Economics)
Topic Questions
21 mark
Which combination of characteristics correctly describes a monopoly?
| barriers to entry | economies of scale | |
| A B C D |
high high low low |
possible impossible possible impossible |
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31 mark
Which combination is usually found in a monopoly?
many buyers and many sellers
many buyers and single seller
single buyer and many sellers
single buyer and single seller
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41 mark
Which characteristic can exist both in monopoly and in a competitive market?
freedom of entry
many buyers
many sellers
perfectly elastic demand curve
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5
1 mark
1 markWhat is a key advantage of competitive markets for consumers?
Limited product variety and choices
Higher prices due to lack of competition
Lower prices and increased product variety
Reduced quality of goods and services
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11 mark
The table shows characteristics of a market.
What are the characteristics of a competitive market?
| product | number of buyers |
number of sellers |
role of firm |
|
|
A B C D |
identical identical similar unique |
many one many few |
many many many few |
price taker price maker price taker price maker |
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21 mark
1 markWhat impact might an increase in the number of competitors have on a competitive market?
It could lead to higher prices for consumers
It might decrease demand for the product
It could enhance consumer choice and reduce prices
It might lead to lower product quality
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31 mark
1 markThe table shows characteristics of a market.
What are the characteristics of a monopoly market?
|
Minimum market share |
Barriers to entry | Number of sellers |
Role of firm |
|
|
A B C D |
50% 25% 13% 25% |
low high low high |
many single many single |
price taker price maker price taker price taker |
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41 mark
1 markWhat impact might a lack of competition have on innovation in a monopoly market?
It encourages firms to invest heavily in research and development
It leads to rapid innovation due to rivalry among competitors
It often leads to slower innovation and complacency
It results in constant product upgrades and improvements
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51 mark
1 markWhat benefit might a monopoly market offer in terms of economies of scale?
Limited opportunities for cost reduction
Reduced efficiency in production due to the large scale
Higher production costs and prices for consumers
Cost reduction and better efficiency in production
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11 mark
What is found in a competitive market?
Every firm earns large profits.
Firms with limited capital can enter the market.
The costs of production are always lower than in a monopoly.
There is limited choice for consumers.
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21 mark
Why might a government encourage a monopoly?
It can compete against foreign firms.
It can have high average costs.
It can make excessive profits.
It can prevent innovation.
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31 mark
What is characteristic of a monopoly market structure?
A monopolist may determine the price of its product.
A monopolist’s product has many substitutes.
There are no external costs.
There is easy entry into the market.
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41 mark
Which international market is the most competitive?
diamonds
foreign currency
petrol (fuel)
washing machines
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51 mark
1 markHow do firms in competitive markets influence prices?
They can set prices at any level they prefer
They accept the market price as given
They collaborate to fix prices
They set prices based on production costs
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