Performance of Firms in Different Market Structures

Oligopolies are able to avoid price competition while maintaining supernormal profits in the long run.

Evaluate this statement.

The degree of competition that a firm experiences is determined only by the barriers to entry into its market.

With the help of a diagram(s), evaluate this statement.

With the help of a diagram, evaluate the impact on consumers and producers of an increase in market contestability.

Subnormal and supernormal profits are only experienced in the short run and only by firms in perfect competition.

With the help of diagrams, evaluate this statement.

The long-term equilibrium position in perfect competition is frequently used to illustrate efficient resource allocation in a free market economy.

Explain why this is so and consider what prevents efficiency from being achieved.

Evaluate, with the aid of a diagram(s), whether excess profit (supernormal profit) is always necessary for the continued existence of firms in perfect competition and monopoly.

The long-term equilibrium position in perfect competition is frequently used to illustrate efficient resource allocation in a free market economy.

Explain why this is so and consider what prevents efficiency from being achieved.

Some firms in oligopoly markets choose to collude rather than engage in price competition. This will lead to higher prices and a less efficient allocation of resources.

Evaluate this statement.

The model of perfect competition is the ideal form of market structure because it is the most efficient.

With the help of diagrams, evaluate this statement.

Evaluate the view that monopolistically competitive firms will always charge lower prices and operate more efficiently than a monopoly firm.