OxfordAQA International GCSE Economics: Competitive and non-competitive markets (9214) – 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 3.1.5.1 to 3.1.5.3 of the OxfordAQA International GCSE Economics (9214) specification, for exams from May/June 2025 onwards. All countries, firms and figures are invented, and money is in zeds (Z). Read the study guide or the revision notes first. See also the course hub, the checklist and the wider markets practice set.

Questions

1. State three factors used to distinguish between market structures. [3]

2. Country Y’s paint market sells 120,000 litres a month. Four firms sell 54,000, 30,000, 24,000 and 12,000 litres.

(a) Calculate the market share of the largest firm. [1] (b) Calculate the combined share of the two largest firms. [2] (c) Explain whether this market is more likely to be competitive or concentrated. [2]

3. Describe two ways in which a producer is likely to operate in a competitive market. [4]

4. A trader sells 80 sacks of rice at Z25 each. Her cost is Z22 per sack.

(a) Calculate her profit. [2] (b) Calculate her profit margin. [2] (c) Explain why her profit is likely to fall if other traders enter the market. [3]

5. Explain one effect of competition on consumers and one effect on producers. [4]

6. Explain one way in which a competitive market may benefit workers and one way in which it may harm them. [4]

7. A bus company is the only operator on a coastal road. It raises its fare from Z20 to Z27, and monthly passengers fall from 5,000 to 4,400.

(a) Calculate the percentage rise in the fare. [2] (b) Calculate the company’s monthly revenue before and after the rise. [2] (c) Explain why the number of passengers fell by much less than the fare rose. [3]

8. Define oligopoly and explain what is meant by interdependence between firms. [4]

9. A factory has fixed costs of Z90,000 a month and variable costs of Z6 per unit. The market price is Z9.

(a) Calculate its average cost at 15,000 units and at 60,000 units. [3] (b) Calculate the profit of the factory at 60,000 units. [2] (c) Explain how this helps to account for the dominance of large firms. [3]

10. Three firms each sell 2,000 units a month at Z12, with a cost of Z9 per unit.

(a) Calculate the profit of each firm. [2] (b) Firm A cuts its price to Z11 and sells 3,200 units, while the others keep Z12 and sell 1,400 each. Calculate A’s profit. [2] (c) The others also cut to Z11, and each firm now sells 2,100 units. Calculate each firm’s profit and its percentage change from part (a). [3] (d) Explain why oligopolists are often reluctant to cut prices. [2]

11. In Country Y’s bottled drink market, three firms hold 40%, 35% and 25% of sales. The two largest propose to merge. Evaluate whether consumers would be worse off. [8]

Answers

1. The number of producers [1]. The degree of product differentiation [1]. Ease of entry [1]. [3] Examiner insight: Name the factors in the specification’s words. Answers like “size” or “price” describe outcomes, not the structure.

2. (a) 54,000 ÷ 120,000 × 100 = 45% [1]. [1] (b) Combined sales = 54,000 + 30,000 = 84,000 [1]; 84,000 ÷ 120,000 × 100 = 70% [1]. [2] (c) More likely concentrated, because two firms hold 70% of sales [1] and only four producers share the market, so competition is limited [1]. [2] Examiner insight: Quote the figure from your calculation in part (c). A verdict with no evidence from the data is weaker.

3. One way: it keeps its price close to rivals’ prices [1] because customers switch to cheaper sellers if it overcharges [1]. Another way: it competes on non-price factors such as service or quality [1] to attract and keep customers when price cannot be raised [1]. [4] Examiner insight: Each “way” needs a reason as well as a label. A bare list of two items earns less than two developed points.

4. (a) Profit per sack = 25 − 22 = Z3 [1]; profit = 3 × 80 = Z240 [1]. [2] (b) Revenue = 25 × 80 = Z2,000; margin = 240 ÷ 2,000 × 100 [1] = 12% [1]. [2] (c) A profit of this size attracts new traders, and entry is easy [1]. Supply in the market rises [1], so the price falls towards cost and each trader’s profit falls [1]. [3] Examiner insight: Show the chain step by step. Jumping from “more traders” to “less profit” misses the link through price.

5. Consumers: prices are lower [1] because a firm that overcharges loses customers to rivals [1]. Producers: they face pressure to keep costs down [1] because thin margins leave little room for waste, and weaker firms may leave [1]. [4] Examiner insight: Keep to one effect on each group, as asked. Extra effects use time without answering the question.

6. Benefit: many employers compete for staff, so workers have more job openings [1] and a better chance of a pay rise [1]. Harm: firms squeezed on price may hold wages down, cut hours or close [1], so jobs are less secure [1]. [4] Examiner insight: A one-sided answer leaves the other side unargued. Match your reasoning to the word “workers”, not just “firms”.

7. (a) Rise = 27 − 20 = Z7 [1]; 7 ÷ 20 × 100 = 35% [1]. [2] (b) Before: 20 × 5,000 = Z100,000 [1]. After: 27 × 4,400 = Z118,800 [1]. [2] (c) There is no rival operator on the road, so passengers have no alternative [1]. People who need to travel must keep paying [1]. Passengers fell by 12% (600 ÷ 5,000), far less than the 35% rise in fare [1]. [3] Examiner insight: Use the structure (sole producer, no substitutes) as the reason. Quoting the 12% against 35% shows you used the data.

8. An oligopoly is a market dominated by a small number of large producers [1] with little room for others to enter [1]. Interdependence means each firm must consider how rivals will react to its decisions [1], for example whether they would match a price cut [1]. [4] Examiner insight: Give an example of the reaction. A definition of interdependence that only repeats the word does not show understanding.

9. (a) At 15,000 units: total cost = 90,000 + 6 × 15,000 = Z180,000 [1]; average cost = Z12 [1]. At 60,000 units: total cost = 90,000 + 360,000 = 450,000; average cost = 450,000 ÷ 60,000 = Z7.50 [1]. [3] (b) Profit per unit = 9 − 7.50 = Z1.50 [1]; profit = 1.50 × 60,000 = Z90,000 [1]. [2] (c) At 15,000 units the average cost of Z12 is above the price of Z9, a loss of 3 × 15,000 = Z45,000 [1], so a small firm cannot survive at that price [1]. The large firm’s lower unit cost lets it keep the price low and stop new entrants matching it, leaving a few producers [1]. [3] Examiner insight: Link the numbers to the idea of economies of scale and market power. Calculations alone do not answer an “explain” part.

10. (a) Profit per unit = 12 − 9 = Z3 [1]; profit = 3 × 2,000 = Z6,000 [1]. [2] (b) Profit per unit = 11 − 9 = Z2 [1]; 2 × 3,200 = Z6,400 [1]. [2] (c) Profit = 2 × 2,100 = Z4,200 [1]. Change = (4,200 − 6,000) ÷ 6,000 × 100 [1] = −30%, a fall of 30% [1]. [3] (d) Rivals are likely to match the cut [1], so every firm ends up with a lower profit and no lasting gain in sales [1]. [2] Examiner insight: In percentage change, divide by the original figure from part (a). State the direction as well as the number.

11. Points that can earn credit, one mark each, up to eight:

• The merged firm would hold 40 + 35 = 75% of sales [1].
• The number of producers would fall from three to two, so there is less rivalry [1].
• With less pressure to keep prices low, the merged firm may raise its prices [1].
• It may also cut choice, for example by dropping a brand [1].
• If barriers to entry are high, new firms would not restrain it [1].
• Against this, a larger firm may gain economies of scale and lower unit costs [1].
• It may pass these savings on to avoid losing sales to the remaining 25% rival [1].
• Judgement: the answer depends on the height of entry barriers, the strength of the rival and whether rules limit the firm, so consumers are probably worse off unless savings are passed on [1]. [8] Examiner insight: Argue both sides, then reach a reasoned judgement that depends on stated conditions. A list of points with no judgement is incomplete evaluation.

Where marks are usually lost

• Naming factors or characteristics without a reason in an “explain” or “describe” question.
• Dividing by the new figure instead of the original in a percentage change.
• Stopping a calculation at profit per unit when the question wants total profit.
• Confusing profit with profit margin, or giving a margin without the percentage sign.
• Claiming a monopoly always charges high prices, rather than saying it can and why.
• Calling a large firm a monopoly when many rivals exist.
• Missing the step through price when linking entry to lower profit.
• Offering only advantages or only disadvantages in an evaluation.
• Giving a conclusion that does not follow from the points made.

Next steps

• Re-read the revision notes for the chains of reasoning.
• Review the study guide examples again.
• Return to the course hub and tick off the checklist.
• Try the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Source: OxfordAQA, International GCSE Economics (9214) specification, first teaching September 2023, first examined May/June 2025, sections 3.1.5.1 to 3.1.5.3.