WASSCE Economics · Paper 1 style

Market structures

One sample question with the full working. 14 more in the app, with instant feedback and repair sessions for the traps below.

A firm under perfect competition is a price taker because

Ait controls the market supply
Bthere are barriers to entry
Cit advertises heavily
Dit is one of many firms selling a homogeneous product

Show the answer and working

Answer: D

Each firm is too small to influence market price.

Trap A Over-generalises a rule: Economic laws hold 'other things being equal' and within limits. Be suspicious of options with always/never/all.

Trap B Picks another type in the same classification: Learn each classification as a table of types with one defining feature each (monopoly: one seller; monopsony: one buyer; command economy: central planning).

Trap C Confuses market structures: Perfect competition: many firms, homogeneous product, price takers. Monopoly: one seller, barriers. Oligopoly: few interdependent firms.

Traps in Market structures

Over-generalises a rule
Economic laws hold 'other things being equal' and within limits. Be suspicious of options with always/never/all.
Picks another type in the same classification
Learn each classification as a table of types with one defining feature each (monopoly: one seller; monopsony: one buyer; command economy: central planning).
Confuses market structures
Perfect competition: many firms, homogeneous product, price takers. Monopoly: one seller, barriers. Oligopoly: few interdependent firms.
Gives only part of the answer
List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.
Picks a closely related concept
Learn related terms as contrasting pairs with one-line definitions, and identify which one the stem describes.
Reverses the direction of the effect
Trace the chain step by step (e.g. buying securities → banks gain cash → money supply rises) and check the sign at every link.
Applies the rule for the opposite case
Before answering, name the case in the stem (inelastic? price floor ABOVE equilibrium? point INSIDE the PPC?) and recall the rule for that case only.
Uses the wrong arithmetic operation
Write the definition in words first (TR = price × quantity; ATC = TC ÷ Q) and only then put in numbers. Check units: totals and averages cannot be added.
Turns the formula upside down
Learn the formula with its meaning: elasticity = responsiveness of QUANTITY, so %ΔQ is on top; k = 1/MPS = 1/(1 − MPC).
Stops at a different economic quantity
Underline what the question asks for and check the final number is THAT quantity, not a step on the way.
Confuses cost concepts
TC = TFC + TVC. AC = TC/Q. MC = ΔTC/ΔQ. Fixed costs do not change with output.

Practise Market structures (14 questions)Send to your class on WhatsApp