GCSE Economics Revision: Oligopoly (collusion, non-price competition) (With Mock Questions!)
Hello, brilliant economists! 🎉
Are you ready to crush your GCSE Economics exam? Today, we’re diving into oligopolies—a super important topic you’ll need to know for your exams! Whether you’re feeling confident or need a little extra help, this guide is here to make sure you’ve got everything covered when it comes to oligopolies—including collusion and non-price competition. Let’s break it down step by step, so you’re feeling great by exam day!
What’s an Oligopoly? 🤔
An oligopoly is a market structure where a few large firms dominate the industry. It’s different from perfect competition or monopolies, because here, companies are highly interdependent—meaning their decisions influence each other. In this structure, companies might work together (collusion) to control the market or use strategies like non-price competition (think advertising, product differentiation) to win over consumers without changing prices.
Understanding these dynamics is crucial, as they shape a lot of the real-world markets you’re familiar with, like supermarkets, airlines, or tech companies.
Key Learning Points 🔍
Before we dive into exam tips, let’s run through the main concepts you’ll need to know:
🧠 Collusion – When firms in an oligopoly secretly agree to cooperate on price or output to gain a higher profit. This can be illegal in many cases, so watch out for how it’s regulated!
🧠 Non-price competition – Instead of lowering prices, firms compete using methods like advertising, product quality, branding, or customer service. In an oligopoly, price wars can be damaging, so companies tend to focus on non-price strategies.
What You Need to Show in Your Exam 💡
To ace your Economics paper, you’ll need to show:
1️⃣ Clear understanding of how oligopolies operate, including both collusion and non-price competition.
2️⃣ Ability to evaluate the pros and cons of collusion, explaining its effects on consumers and market efficiency.
3️⃣ Knowledge of real-world examples that demonstrate oligopoly behavior. Mention industries like airlines, supermarkets, or oil companies to back up your points.
4️⃣ Analysis of non-price competition strategies. Be ready to explain why firms might choose these strategies instead of engaging in price wars.
Top Tips Before Your Exam ✨
Here are a few final things to keep in mind as you prepare for the big day:
✅ Practice diagrams showing oligopoly market structures. Diagrams can really help you explain how firms in an oligopoly behave.
✅ Stay clear on definitions like collusion, cartel, and non-price competition. Knowing your terminology inside out will save you time and stress in the exam.
✅ Think of real-world examples—this will help you stand out and show deeper understanding.
✅ Don’t confuse non-price competition with price competition! It’s easy to mix them up, so keep an eye out for questions that test this difference.
✅ Timed practice—try to answer past paper questions quickly, so you’re comfortable managing time during the actual exam.
Mock Questions 📝
Here are a few practice questions to get your brain warmed up:
Q1 - Which of the following best describes collusion?
a) Firms secretly agreeing to charge higher prices
b) Firms lowering prices to compete
c) Firms using advertising to compete
d) Firms hiring more employees to increase production
Q2 - What is the main aim of non-price competition in an oligopoly?
a) To reduce production costs
b) To differentiate products from competitors
c) To increase price competition
d) To encourage government intervention
Q3 - Which of the following industries is most likely to be an oligopoly?
a) Local corner shops
b) The UK supermarket industry
c) Small-scale farming
d) The car wash industry
Q4 - What is the potential disadvantage of firms colluding in an oligopoly?
a) Lower prices for consumers
b) Reduced variety of products
c) Greater market efficiency
d) Increased government intervention
Q5 - Which of the following is an example of non-price competition?
a) Cutting prices by 10%
b) Offering free delivery services
c) Laying off workers to cut costs
d) Increasing production by 20%
To check your answers and see more questions check out our GCSE Economics Multiple-Choice booklet, with 250 sample questions and answers for you to revise
Good luck, and remember—you’ve got this! Keep revising, stay focused, and you’ll be smashing your Economics exam in no time! 😊📚