This question was not popular with the candidates, the few who attempted it scored below average marks as a result of poor graphical illustration in the (b) part. These candidates would have scored better marks if they had included the following in their answers.

(a) Perfect competition is a market structure in which there are many buyers and sellers such that buyers or sellers cannot influence the price i.e. buyers or sellers are price taker.

(b)i short-run Equilibrium of a perfect Competitor

(b)iiShort- run equilibrium of an imperfect competitor.

The similarities and differences in equilibrium are as follows:

(i) Both the perfect competitor and the imperfect competitor are in equilibrium when MC=MR;
(ii) In each case, the market is in equilibrium when the MC curve cuts the MR curve from below,

(iii) In the short-run, both the perfect competitor and the imperfect competitor can make abnormal profits;

(iv) The firm in a perfect competition is in the short run equilibrium when MC=AR=P>AC while a firm under imperfect competition is in short run equilibrium when MC=MR<AR.

(c) (i) Only one or few buyer(s)s and seller(s);
(ii) There is preferential treatment;
(iii) There is transport cost;
(iv) Goods sold are heterogeneous (not homogenous).