waecE-LEARNING
Economics Paper 2, May/June 2013  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments
Weakness/Remedies
Strength




QUESTION 10

(a)What is perfect competition?
(b)With the aid of diagrams, compare the short run equilibrium position of a perfect competitor and an imperfect competitor.
(c)State any two features of an imperfect market.

OBSERVATIONS

 

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).

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