EDEXCEL A-LEVEL ECONOMICS
EDEXCEL GENERAL CERTIFICATE OF EDUCATION (GCE)
ADVANCED LEVEL ECONOMICS – THEME 3 ASSESSMENT
Business, Costs, Revenues, Market Structures and Market
Dynamics
SPRING EXAMINATION SERIES 2026
Perfect competition characteristics (6)
Homogeneous goods
Firms are price takers
Many buyers and sellers
No barriers to entry/exit
Perfect information
Firms profit maximise, consumers maximise utitlity
Monopolistic competition characteristics (5)
Product differentiation
Many buyers and sellers
Low barriers to entry/exit
Non-price competition (e.g. marketing)
Firms profit maximise
1|Page
,Oligopoly characteristics (6)
Few large dominant firms
High barriers to entry/exit
Product differentiation
Interdependence
Non-price competition
Firms profit maximise/look for market share
Collusion
Illegal way to rig the market gain higher profits
Overt collusion
Formal, can be traced
Tacit collusion
Firms collude with no formal agreement
Game theory
Without collusion, firms will always choose to produce at the lowest price
This leads to price rigidity (kinked demand curve)
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, Monopoly characteristics (6)
One single supplier
Unique products
Firms are price makers
High barriers to entry/exit
Imperfect information
Firms profit maximise
Natural monopoly
Cannot be more than one provider of a good or service (e.g. train tracks)
Market can only sustain one firm
If the government introduces competition, it cannot be sustained in the long run due to
insufficient economies of scale
Labour market monopsonist
The sole employer of labour in a given profession
Conditions
Wage maker
Maximises revenue
Exists in producer and labour markets
3|Page
EDEXCEL GENERAL CERTIFICATE OF EDUCATION (GCE)
ADVANCED LEVEL ECONOMICS – THEME 3 ASSESSMENT
Business, Costs, Revenues, Market Structures and Market
Dynamics
SPRING EXAMINATION SERIES 2026
Perfect competition characteristics (6)
Homogeneous goods
Firms are price takers
Many buyers and sellers
No barriers to entry/exit
Perfect information
Firms profit maximise, consumers maximise utitlity
Monopolistic competition characteristics (5)
Product differentiation
Many buyers and sellers
Low barriers to entry/exit
Non-price competition (e.g. marketing)
Firms profit maximise
1|Page
,Oligopoly characteristics (6)
Few large dominant firms
High barriers to entry/exit
Product differentiation
Interdependence
Non-price competition
Firms profit maximise/look for market share
Collusion
Illegal way to rig the market gain higher profits
Overt collusion
Formal, can be traced
Tacit collusion
Firms collude with no formal agreement
Game theory
Without collusion, firms will always choose to produce at the lowest price
This leads to price rigidity (kinked demand curve)
2|Page
, Monopoly characteristics (6)
One single supplier
Unique products
Firms are price makers
High barriers to entry/exit
Imperfect information
Firms profit maximise
Natural monopoly
Cannot be more than one provider of a good or service (e.g. train tracks)
Market can only sustain one firm
If the government introduces competition, it cannot be sustained in the long run due to
insufficient economies of scale
Labour market monopsonist
The sole employer of labour in a given profession
Conditions
Wage maker
Maximises revenue
Exists in producer and labour markets
3|Page
