CAIE A-Level Economics 7.6.1 Market Structures

CAIE A-Level Economics 7.6.1 Market Structures
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise classifying perfect competition, monopolistic competition, oligopoly, monopoly and natural monopoly from concentration, differentiation, entry and cost evidence.

How this is tested

  • classify perfect competition from many price-taking firms, identical output and free entry
  • distinguish monopolistic competition and oligopoly using differentiation and concentration
  • identify monopoly or natural monopoly from dominance, entry barriers and falling LRAC over demand

Question 10

[Maximum number: 1]

Which statement is correct for a firm classed as a natural monopoly?

A

It will always operate in the public sector and earn normal profits.

B

It will have high barriers to entry and be the dominant producer.

C

It will easily benefit from external economies of scale.

D

It will have higher average costs than a monopolistically competitive firm.