Edexcel A Level Economics A
Edexcel A Level Economics A 3.4 Market Structures Exam Questions
Free Edexcel A Level Economics A exam questions on 3.4 Market Structures, with mark schemes. Covers efficiency, perfect competition, monopolistic competition, oligopoly, monopoly and contestability.
3.4 Market Structures exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
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Edexcel A Level Economics A 9EC0 Flashcards (Anki & Quizlet)
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Use them on Anki or Quizlet, then test yourself with the questions on this page.
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About Edexcel A Level Economics A 3.4 Market Structures
3.4 is the core of Theme 3 and the most diagram-heavy topic in the course. Expect questions on efficiency, game theory and the effects of monopoly power.
What you need to know
- Efficiency Allocative (P = MC), productive (lowest point on AC), dynamic and X-inefficiency.
- Perfect competition Characteristics, short run and long run equilibrium diagrams, and why the firm is a price taker.
- Monopolistic competition and oligopoly Characteristics, concentration ratios, interdependence, collusion, cartels, game theory and pricing strategies including price wars and limit pricing.
- Monopoly and monopsony Profit maximising diagram, natural monopoly, price discrimination, and the costs and benefits of monopoly and monopsony.
- Contestability Low barriers to entry and exit and few sunk costs make a market contestable, so incumbents keep prices near normal profit levels.
Common mistakes in 3.4 Market Structures
- Drawing a perfectly competitive firm with a downward-sloping demand curve.
- Confusing allocative efficiency (P = MC) with productive efficiency (min AC).
- Saying a monopoly always charges the highest possible price; it charges where MC = MR.
- Forgetting that a concentration ratio describes market share, not market power.
Try three 3.4 Market Structures exam-style questions
1. Define allocative efficiency. (2 marks)
Show the mark scheme answer
When resources are allocated to produce the goods and services consumers value most (1), where price equals marginal cost (1).
2. Calculate the four-firm concentration ratio if the largest firms have market shares of 25%, 20%, 15% and 10%. (1 mark)
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25 + 20 + 15 + 10 = 70 percent.
3. Explain why firms in an oligopoly may choose not to compete on price. (3 marks)
Show the mark scheme answer
Firms are interdependent (1), so a price cut is likely to be matched by rivals (1), leading to a price war that lowers profits for all, so they compete through non-price methods instead (1).
3.4 Market Structures FAQs
What does Edexcel A Level Economics 3.4 cover?
Efficiency, perfect competition, monopolistic competition, oligopoly, monopoly, monopsony and contestability.
Which diagrams do I need for 3.4?
Perfect competition in the short and long run, monopolistic competition, monopoly, natural monopoly and price discrimination.
Is game theory examined?
Yes. You should be able to read a payoff matrix and explain the dominant strategy and the incentive to collude or cheat.
Revise this topic with flashcards: Edexcel A Level Economics A 9EC0 Flashcards, with mark scheme answers for Anki and Quizlet.
