A2 Economics Test : Market Structures Diagrams

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1 TheRevisionGuide.com Accelerating your potential Economics Revision Answer Sheet A2 Economics Test : Market Structures Diagrams Worksheets by: Apsara Sumanasiri Student Name : Date:. Marks: / 120 TheRevisionGuide ( is a free online resource for Economics and Business Studies. Don t forget to visit our website as part of your revision by Apsara Sumanasiri Page 1

2 A2 Economics Unit 3 : Business Economics Test - Answers Diagrams and Explanations Question 1 Answer ALL of the following questions with diagrams as well as written explanation where necessary Explain the relationship between TR, MR and AR (Mark elasticities on AR) [4 marks] 2014 by Apsara Sumanasiri Page 2

3 Question 2 What shape would AR and MR take when TR is rising at a constant rate. [4 marks] Question 3 Explain the relationship between AC and MC, with a written explanation of what happens when AC and MC is rising/falling. [4 marks] Question 4 What is the shut-down point? What does this mean? [4 marks] 2014 by Apsara Sumanasiri Page 3

4 Question 5 Draw a diagram of a profit maximising monopolist. (Shade the profit region) [4 marks] Question 6 Draw a diagram of a perfectly competitive firm making short run profits. [4 marks] Question 7 Draw a diagram of a perfectly competitive firm making short run losses. [4 marks] 2014 by Apsara Sumanasiri Page 4

5 Question 8 Draw a diagram and explain how a perfectly competitive firm making short run profits would achieve long run equilibrium [6 marks] Question 9 Draw a diagram and explain how a perfectly competitive firm making short run losses would achieve long run equilibrium [6 marks] 2014 by Apsara Sumanasiri Page 5

6 Question 10 Draw a diagram and explain the impact on price, output and profits when a monopolist changes its objectives from profit maximisation to revenue maximisation [6 marks] Question 11 Draw a diagram and explain the impact on price, output and profits when a monopolist changes its objectives from sales maximisation to profit maximisation [6 marks] 2014 by Apsara Sumanasiri Page 6

7 Question 12 Draw a diagram and explain the impact on price, output and profits of a monopolist when there is an outward shift of AR [8 marks] Question 13 Draw a diagram and explain the impact on price, output and profits of a monopolist when AC increases while MC remains the same [8 marks] 2014 by Apsara Sumanasiri Page 7

8 Question 14 Draw a diagram and explain the impact on price, output and profits of a monopolist when there is an outward shift of AR while AC and MC is constant [8 marks] Question 15 Draw a diagram compare a monopoly vs. perfect competition, give a written explanation of their differences [8 marks] 2014 by Apsara Sumanasiri Page 8

9 Question 16 Draw a diagram of an oligopolist, and give a written explanation about the shape of AR [8 marks] Question 17 Draw a diagram of price discrimination, and identify the conditions necessary to effectively price discriminate [8 marks] 2014 by Apsara Sumanasiri Page 9

10 Question 18 Draw and explain the transition of a monopolistically competitive firm from the short run into long run equilibrium (include a written explanation) [8 marks] 2014 by Apsara Sumanasiri Page 10

11 Question 19 Draw a natural monopoly diagram [4 marks] Question 20 Draw and explain how and why a natural monopolist makes losses if they were made to be allocatively efficient [8 marks] 2014 by Apsara Sumanasiri Page 11

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