Chapter 18 - Competitive Markets IGCSE Economics

Competition is rivalry that exists between firms when trying to sell goods to the same group of customers.

• True

• False

The law of demand states that

• there is a positive relationship between price and quantity demanded

• there is an inverse relationship between price and demand

• there is an inverse relationship between price and quantity supplied

• there is an inverse relationship between price and quantity demanded

Answer explanation

The law of demand deals with quantity demanded

Consumers want...

• More choice

• Less choice

• Low prices

• Good quality

Lisa just arrived at her favourite restaurant to see this sign. This is an example of...

• Price Taking

• Price Making

• Barriers to Exit

• Market Uncertainty

What is a price taker?

• a consumer who accepts different prices from different firms.

• a perfectly competitive firm

• a firm that cannot influence the market price.

Which of the following is a key assumption of competitive​ markets?

• It is difficult for new sellers to enter the market.

• Each seller has a very small share of the market.

• Firms can influence market price.

The greater the competition in the market, the greater the profit?

• Neither

• True

• False

Which of the following is NOT one of the conditions of competitive markets?

• Many actors (consumers and producers)

• Very different products

• Widespread information available to consumers and producers

• Low barriers to entry and exit of market

A market structure where many companies are selling identical products.

• Competitive Market

• Monopoly

• Oligopoly

Competitive markets have low barriers to entry. This makes it easy for firms to enter and leave the market. Which are examples of barriers to entry?

• High Start-Up Costs

• Patents

• Large Marketing Budget

• Expensive Technology