OCR GCSE Economics: Competition, monopoly, production, costs and scale (J205) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 2.5 (Competition) and 2.6 (Production) of the OCR GCSE (9-1) Economics specification (J205), Version 2.0, for first assessment in 2019. The specification is not tiered. All firms, markets and figures are invented and illustrative.

Read the study guide first, or revise with the revision notes. See also the OCR GCSE Economics hub, the checklist and the free diagnostics.

Questions

1. State two reasons why producers compete with each other in a market economy. [2]

2. A small firm sells 300 pots of hand cream a week at £4.50 each. Its fixed cost is £450 a week and its variable cost is £2.00 per pot. Calculate its total cost, average cost, total revenue and profit. [4]

3. The table shows the market for flowers in Town X (invented) before and after new stalls open.

Price (£)	Demand	Old supply	New supply
7	48	24	36
8	42	30	42
9	36	36	48
10	30	42	54

(a) State the equilibrium price and quantity before and after the new stalls open. [2] (b) Calculate the percentage change in the equilibrium price. [1] (c) Analyse how the opening of new stalls changes the price. [3]

4. A tool firm made 5,200 tools with 130 workers in year 1 and 6,000 tools with 125 workers in year 2.

(a) Work out how many tools each worker made in year 1 and in year 2. [2] (b) Find the percentage change in productivity between the two years. [1] (c) Explain how higher productivity could help the firm compete. [2]

5. In Country C (invented) four bus firms have annual sales of £42m (Firm A), £36m (B), £24m (C) and £18m (D).

(a) Calculate Firm A’s market share. [1] (b) Calculate the share held by A and B together. [1] (c) Explain why this market might be described as an oligopoly and one way it differs from a competitive market. [3]

6. A pet-grooming business has fixed cost of £900 a week and variable cost of £3.50 per visit. It charges £8 a visit.

(a) For 400 visits, calculate total cost, average cost, total revenue and profit. [4] (b) For 100 visits, calculate the profit or loss. [2]

7. A packaging firm doubles output from 10,000 to 20,000 boxes. Total cost rises from £80,000 to £132,000.

(a) Calculate average cost at each output. [2] (b) Calculate the percentage change in average cost. [1] (c) Explain one source of economies of scale. [2]

8. Explain one way the government acts as a producer and one way it can influence production by private firms. [4]

9. The hand cream firm in question 2 finds its variable cost rises to £2.40 per pot. It still sells 300 pots at £4.50.

(a) Calculate its new total cost and profit. [2] (b) Calculate the percentage fall in profit. [1] (c) Explain the likely effect on the supply of hand cream. [3]

10. Evaluate the impact of competition on producers and consumers. [8]

11. Evaluate the importance of productivity for an economy. [8]

Answers

1. Any two of: to earn profit [1]; to win market share or customers [1]; to survive; to grow. [2] Examiner insight: Give two separate reasons. Repeating one reason in different words, or giving a method such as cutting price, adds little.

2. Variable cost = 2.00 × 300 = £600; TC = 450 + 600 = £1,050 [1]. AC = 1,050 ÷ 300 = £3.50 [1]. TR = 4.50 × 300 = £1,350 [1]. Profit = 1,350 − 1,050 = £300 [1]. [4] Examiner insight: Show each formula and keep the units. Writing every step makes your working easy to follow and easy for you to check.

3. (a) Before: £9 and 36 [1]. After: £8 and 42 [1]. (b) (8 − 9) ÷ 9 × 100 = −11.1% [1]. (c) New stalls increase supply [1], so the supply curve shifts right and there is a surplus at £9 (48 against 36) [1], which pushes sellers to cut price until the market clears at £8 [1]. [6] Examiner insight: “Analyse” asks for a chain, so link the event, the shift, the surplus and the new price in order. Quoting figures from the table strengthens the chain.

4. (a) Year 1: 5,200 ÷ 130 = 40 tools [1]. Year 2: 6,000 ÷ 125 = 48 tools [1]. (b) (48 − 40) ÷ 40 × 100 = 20% [1]. (c) Each worker makes more, so labour cost per tool falls [1], letting the firm charge lower prices or earn more profit than rivals [1]. [5] Examiner insight: Divide by workers, not by years. In the explanation, say what happens to cost per unit rather than only repeating that output rose.

5. (a) Total = 120; 42 ÷ 120 × 100 = 35% [1]. (b) (42 + 36) ÷ 120 × 100 = 65% [1]. (c) A few large firms hold most of the sales [1], so the market is dominated by a small number of firms, which is an oligopoly [1]. In a competitive market there are many firms and none can influence price alone, whereas here each firm’s decisions affect rivals [1]. [5] Examiner insight: Use the figures from the table to support the label. A difference stated as “more firms” without saying what that means for price control is thin.

6. (a) Variable cost = 3.50 × 400 = £1,400; TC = 900 + 1,400 = £2,300 [1]. AC = 2,300 ÷ 400 = £5.75 [1]. TR = 8 × 400 = £3,200 [1]. Profit = 3,200 − 2,300 = £900 [1]. (b) TC = 900 + 350 = £1,250 [1]. TR = 800, so loss = 800 − 1,250 = £450 loss [1]. [6] Examiner insight: Say “loss” and give the amount when revenue is below cost. A negative sign alone is fine only if the question’s context makes the meaning clear.

7. (a) 80,000 ÷ 10,000 = £8.00 [1]; 132,000 ÷ 20,000 = £6.60 [1]. (b) (6.60 − 8.00) ÷ 8.00 × 100 = −17.5% [1]. (c) For example, purchasing: larger orders earn discounts, so material cost per box falls [1] and average cost falls as output rises [1]. [5] Examiner insight: Total cost rose but average cost fell, and the explanation should say exactly that. Naming a type of economy without saying why cost per unit falls earns little.

8. Producer: the government provides services such as state education [1], funded from taxation [1]. Influence: it can give a subsidy that lowers costs and raises supply [1], or set rules and taxes that change firms’ costs and output [1]. [4] Examiner insight: Give one of each and develop it. Two examples of the same role cannot cover both parts.

9. (a) New VC = 2.40 × 300 = £720; TC = 450 + 720 = £1,170; profit = 1,350 − 1,170 = £180 [2]. (b) (180 − 300) ÷ 300 × 100 = −40% [1]. (c) Higher costs cut profit at every price [1], so firms are willing to supply less [1] and the supply curve shifts left [1]. [6] Examiner insight: Separate a cost change from a price change. A cost rise shifts the whole curve, while a price rise is a movement along it.

10. Consumers gain: competition tends to lower price because rival cuts and new entrants raise supply [1], and firms may improve choice and quality [1]. Producers: margins fall [1], weaker firms may leave and workers lose jobs [1], but efficient firms cut costs or innovate and may win share [1]. Against consumers: if rivals collapse, fewer firms remain and prices may later rise [1]. Judgement: competition is usually good for consumers and mixed for producers [1], depending on how easily customers can switch and whether firms can cut cost without cutting quality [1]. [8] Examiner insight: A one-sided list rarely shows evaluation. Weigh producers against consumers and finish with a judgement that follows from your reasons.

11. Productivity is output per worker or other input [1]. Higher productivity lowers cost per unit [1], so firms can compete on price at home and abroad [1]. It raises output, incomes and tax revenue, supporting growth [1], and wages can rise without higher prices [1]. However, machines may replace workers, and some may lose jobs [1]. More output can harm the environment [1]. Judgement: productivity is important for long-run living standards, provided gains are shared and damage is limited [1]. [8] Examiner insight: Do not treat more production as the same as more productivity. A judgement works best when it says which effect matters more and why.

Where marks are usually lost

• Leaving out units, or the word “loss” when revenue is below cost.
• Using total cost in place of average cost, or the reverse.
• Mixing up price change (movement along) with cost change (shift).
• Calling a market of a few firms a monopoly.
• Describing benefits of competition for consumers only.
• Treating more output as higher productivity.
• Giving a list in an “evaluate” question with no supported judgement.
• Quoting percentages without dividing by the original value.

Next steps

• Revise with the revision notes and the study guide.
• Check the course hub and the checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OCR GCSE (9-1) Economics (J205), specification Version 2.0 (June 2026), for first assessment in 2019, published by OCR. Sections 2.5 and 2.6.