Different market structures (perfect competition, monopolies, oligopolies etc)

    OCR
    GCSE

    Analyze the spectrum of market structures defined by the degree of competition, ranging from the theoretical abstraction of Perfect Competition to the concentration of Pure Monopoly. Evaluate the implications of each structure for economic efficiency (allocative, productive, and dynamic) and consumer welfare. Contrast the static efficiency of competitive markets with the potential for dynamic efficiency in concentrated markets. Assess the role of the Competition and Markets Authority (CMA) in regulating market power and promoting contestability.

    5
    Objectives
    4
    Exam Tips
    4
    Pitfalls
    3
    Key Terms
    4
    Mark Points

    Learning Objectives

    What you need to know and understand

    • Monopoly definition: A market dominated by a single seller (or firm with >25% share).
    • Oligopoly characteristic: A market dominated by a few large firms exhibiting interdependence.
    • Competitive market feature: Many buyers and sellers with low barriers to entry.
    • Economies of Scale: Cost advantages that enterprises obtain due to their scale of operation.
    • Barriers to Entry: Factors like high startup costs, branding, or patents that prevent new firms from entering.

    Marking Points

    Key points examiners look for in your answers

    • Award marks for precise definitions of market structures (e.g., Oligopoly defined by interdependence and few dominant firms).
    • Credit analysis that explicitly links market structure to consumer outcomes (price, choice, quality) using chains of reasoning.
    • Responses must utilise the provided quantitative or qualitative data to support arguments regarding market power.
    • Evaluation must weigh benefits (e.g., innovation, economies of scale) against drawbacks (e.g., higher prices, inefficiency) to reach a supported judgement.

    Examiner Tips

    Expert advice for maximising your marks

    • 💡When evaluating monopolies, explicitly contrast the impact on producers (profit) versus consumers (price/choice).
    • 💡In calculation questions regarding market share, show all working to secure method marks even if the final answer is incorrect.
    • 💡For 'Evaluate' questions, ensure the conclusion directly answers the specific question asked rather than summarising previous points.
    • 💡Use the connective 'this leads to' to ensure chains of reasoning are fully developed for AO3 marks.

    Common Mistakes

    Pitfalls to avoid in your exam answers

    • Confusing the characteristics of oligopoly (interdependence/few firms) with pure monopoly (single firm).
    • Asserting monopolies are solely detrimental without considering dynamic efficiency or potential for economies of scale.
    • Describing price changes generically without referencing the mechanism of supply and demand shifts.
    • Failing to apply the answer to the specific industry or context provided in the case study.

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    Comprehensive revision notes & examples

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    Key Terminology

    Essential terms to know

    Likely Command Words

    How questions on this topic are typically asked

    State
    Calculate
    Explain
    Analyse
    Evaluate
    Discuss

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