Contrast the features of a perfect competitive market with those of an oligopoly and compare the aims of the firms in each of these market structures.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. Explanation in terms of criteria for perfect competition and the similarities/differences that occur in oligopoly; size and number of firms. Candidates should also consider the likely aims of the two structures – profits, output, and price changes.
2. L4 (9-12 marks): For an explanation/comment of both market structures – criteria, aims, likely profits with a clear structure.
3. L3 (7-8 marks): For a competent explanation/comment that does not fully analyse both types of market structure. There will be some comment, but the analysis will not be fully developed or extensive.
4. L2 (5-6 marks): For an accurate though undeveloped explanation/comment concentrating possibly on either the criteria or the aims probably presented as two separate parts of the answer with no direct distinction drawn.
5. L1 (1-4 marks): For an answer that shows some knowledge but does not indicate that the question has been fully grasped or where the answer is mostly irrelevant.
6. Discussion and comment on the determination of price and output, market price takers or price makers, levels of output, levels of profit in short run and long run. Supernormal profits might occur in perfect competition in the short run but not in the long run; supernormal profits might occur in the long run in monopoly. Actual price may be higher in monopoly, but economies of scale may enable a lower price in monopoly.
7. L4 (9-13 marks): For a sound discussion with good explanation of the analysis and a clear understanding of the differences between perfect competition and monopoly.
8. L3 (7-8 marks): For a competent comment but with limited development of the analysis or a concentration on either perfect competition or monopoly.
9. L2 (5-6 marks): For a brief explanation of both market structures and with a weak discussion of the distinction between the two types of market.
10. L1 (1-4 marks): For an answer that has some basic correct facts but includes irrelevancies and errors of theory.