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A2 Econ - Micro - Market Structures 1

Quiz by Mark Seccombe

EdExcel (A-Level)
Economics A
English National Curriculum

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10 questions
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  • Q1
    Which of the following can be deduced from the above information?
    Question Image
    The US airline industry is a natural monopoly
    The four firm concentration ratio is 64.5 per cent
    The US airline industry is monopolistically competitive

    There are low sunk costs in the US airline industry.

    The US airline industry is highly concentrated
    60s
    3.4.4
  • Q2
    Super normal profits being made by a perfectly competitive firm in the very short run would disappear in the long run because of
    firms engaging in large scale advertising

    high sunk costs

    allocative inefficiencies
    differentiated goods
    freedom of entry into this market
    60s
    3.4.2
  • Q3
    A profit maximising monopolist facing constant average costs experiences a decrease in demand. Other things being equal, which of the following is likely to happen?
    Output falls, price rises, profit falls
    Output stays constant, price falls, profit falls
    Output rises, price rises, profit stays constant
    Output stays constant, price rises, profit falls

    Output falls, price falls, profit falls

    60s
    3.3.4
  • Q4
    Assuming that demand is price inelastic, which of the following strategies shown in the grid would maximise the revenue of the two firms?
    Question Image
    Both firms set a high price
    APJ sets a high price and Juju a low price
    Both firms set a low price
    Juju sets a high price and APJ a low price

    Both firms set a price to increase consumer surplus

    60s
    3.4.4
  • Q5
    A firm in long run equilibrium under monopolistic competition will be
    allocatively but not productively efficient
    productively but not allocatively efficient
    productively and allocatively inefficient
    making supernormal profits

    allocatively and productively efficient

    60s
    3.4.3
  • Q6
    In May 2009, British Airways (BA) quoted the following prices for a flight from London to Toronto, Canada. The most likely explanation of this pricing strategy is:
    Question Image
    that there is a difference in price elasticity of demand in August and October
    more spare capacity on BA’s planes on 1 August 2009

    an expectation that the world recession will be over by October 2009

    higher costs of flying planes in October than in August
    the expectation that some airlines will go bankrupt between August and October 2009
    60s
    3.4.5b
  • Q7
    A firm engaged in ‘satisficing’ behaviour is most likely to:
    minimise costs
    maximise profits

    produce at an output different to that of a profit maximising firm

    maximise sales
    maximise revenue
    60s
    3.2.1d
  • Q8
    A profit-maximising firm will produce at the productively and allocatively efficient level of output in which of the following market conditions?

    Oligopoly

    Perfect competition in the long run
    Monopolistic competition in the long run
    Perfect competition in the short run
    Monopoly
    60s
    3.4.1
  • Q9
    The diagram shows the costs and revenues for a profit maximising firm in a market. The most likely outcome for the firm, assuming no change in costs or demand, is to
    Question Image

    shut down immediately

    continue in business and cut the price
    continue in business and raise the price
    continue in business in the short run but shut down in the long run
    continue in business and make supernormal profit ZYWX
    60s
    3.3.4
  • Q10
    Game theory can be used to illustrate which of the following examples of competitive behaviour?
    Price leadership in perfect competition
    Limit pricing in monopolistic competition
    Tacit collusion in oligopoly

    Price discrimination by a monopolist

    Revenue maximisation in monopolistic competition
    60s
    3.4.4

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