2.5 Competition - Economics OCR

1 A village is over 10 miles away from the nearest two towns. The village shop sells bread. For someone living in the village wanting to buy bread, the shop is a

• competitor

• monopolist

• oligopolist

• specialist

The prices of branded goods, such as Heinz baked beans, are usually higher than a supermarket’s own label. This is likely to be due to

• higher advertising costs

• higher productivity

• lower average costs

• lower profit margins

Firms need to survive in a market. Which of the following is an example of a suitable method to survive?

• Encourage existing customers to return

• Enter into competition with consumers

• Provide an external economy of scale

• Reduce total supply

An oligopoly differs from a competitive market because

• a competitive market has larger firms than an oligopoly

• a competitive market has lower barriers to entry than an oligopoly

• firms in an oligopoly do not differentiate their products

• firms in an oligopoly only compete on price

Which of the following is the most likely result of increased competition within a market?

• A High barriers to entry

• B High production costs

• C Increased profits

• D Lower prices

In a competitive market

• the government must control the price

• the item that is traded must be a good

• the item that is traded must be a service

• there must be many sellers

A market is an oligopoly if

• each of the firms in the market has only a few customers

• each of the firms in the market makes many products

• most of the market is supplied by a small number of firm

• there is only one firm in the market

A characteristic of a monopoly is that there is an absence of

• competition

• economies of scale

• opportunity cost

• productivity

What would be the best advice for a new business entering the restaurant market?

• Cut the profits on its products

• Extend the range of its products

• Reduce its production costs

• Spend money on advertising