- 6 Marks
BMIS – March 2024 – L1 – Q2c – Competitive forces and markets
Explain characteristics of a perfectly competitive market and how a monopolist can maximize revenue by choosing either price or quantity.
Question
A perfectly competitive market has been described as one in which buyers and sellers have no option but to take the price determined by the forces in the market. Whereas prices are determined by the forces in a perfectly competitive market, a monopolist firm can maximise its revenue by doing one of two things – choose price or quantity.
Required: i) Explain THREE (3) characteristics of a perfectly competitive market. (3 marks) ii) Explain the statement in bold. (3 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Economic theory, Market structure, Monopoly, Perfect competition, Price determination
- Level: Level 1
- Topic: Competitive forces and markets
- Series: MAR 2024
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