Economics Grade 12 Questions and AnswersDynamics of Perfect Markets Economics Grade 12 Questions and Answers

Dynamics of Perfect Markets Economics Grade 12 Questions and Answers

Dynamics of Perfect Markets Economics Grade 12 Questions and Answers. The key characteristics of perfect competition are that there are a large number of firms, and the products are homogeneous and identical. The consumer has no reason to express a preference for any particular firm because of this. There is freedom of entry and exit into and out of the industry or market.

THE DYNAMICS OF PERFECT MARKETS QUESTIONS AND ANSWERS

Activity 1
Study the diagram below and answer the questions that follow.
act1

  1. Define the concept market structure. (2)
  2. How many sellers will one find in a monopoly market? (2)
  3. In what market are all participants price-takers? Motivate your answer. (4)
  4. Explain the shape of the individual demand curve under perfect competition. (4)
  5. Under which market structure will you place the following businesses?
    • KFC
    • Eskom
    • Vodacom (6)
  6. Explain in your own words the message behind the pie-charts shown above. (4)

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Answers to activity 1

  1. Market structure refers to how a market is organised33 (2)
  2. One 33 (2)
  3. Perfect markets 33 there are too many producers and
    consumers for one producer to influence the price 33 (4)
  4. Horizontal to the quantity axis/perfectly elastic 3333 (4)
  5. KFC: monopolistic competition 33 Eskom: monopoly 33
    Vodacom: oligopoly 33 (6)
  6. Under perfect competition there are many sellers and
    buyers.3Under monopolistic competition there are many
    sellers and a few buyers.3 In the oligopoly there are many
    buyers but few sellers. 3 In a monopoly there is only one seller
    but many buyers.3 (4)

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