Imperfect Competitio Word Scramble
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| Question | Answer |
| State the assumptions underlying the theory of imperfect competition? | Many buyers, many sellers, product differentiation exists, freedom of entry & exit, reasonable knowledge, each firm attempts to maximise profits. |
| State the advantages imperfect competition offers to consumers? | Greater choice, normal profit, lower prices, innovative goods/services, access to information. |
| State one feature of a firm in imperfect competition in the long run which is common to a firm in perfect competition? | Earn normal profit because AR=AC |
| State the features of a firm in imperfect competition in the long run which is common to a firm in monopoly? | Wasteful of resources(not produces at the lowest point of AC), downwards sloping D/C(must lower P to increase Qd), price is greater than MC (indicates more of the good could be produced). |
| State an example which operates under conditions of imperfect competition? | Retail market for petrol |
| State the shape of the demand curve which faces a firm in imperfect competition? | Downwards sloping left to right |
| State why the shape of the demand curve in imperfect competition is downwards sloping? | There are many goods which are close substitutes, if a firm increase its price, there will be a reduction in demand, as some consumers will switch to the competitive goods, which have become relatively cheaper. |
| Define product differentiation? | The goods which are produced are close substitutes/similar goods/ not identical goods. |
| State how product differentiation can be achieved? | Branding, competitive advertising, product innovation. |
| Outline the equilibrium position facing a firm in imperfect competition in relation to SNP, Price and Equilibrium in the short run? | SNPs are earned as AR>AC, produced Q1 and sells this output at P1, Equilibrium(E1) occurs where MC=MR. |
| Outline the equilibrium position facing a firm in imperfect competition in the long run in relation to cost of production and scarce resources? | Not producing at the lowest point on AC at point C and they are wasting scarce resources. |
| Outline the equilibrium position facing a firm in imperfect competition in relation to SNP, Price and Equilibrium in the long run? | SNPs are earned as AR>AC, produced Q2 and sells this output at P2, Equilibrium(E1) occurs where MC=MR. |
| Outline the equilibrium position facing a firm in imperfect competition in the long run in relation to cost of production and scarce resources? | Not producing at the lowest point on AC at point C and they are wasting scarce resources. |
Created by:
deborahh
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