Market Structure

Front 1

Def of market structure

Back 1

This is a term that explains conditions that exist in a market

Front 2

what’s perfect competition

Back 2

this is an imaginary market structure that acts as a benchmark to the real market structure

Front 3

Characteristics of perfect competition

Back 3

1) high degree of competition

2) homogeneous products. These are products which are similar or identical to customers

3) no barriers to entry or exit the market

4) perfect knowledge

5)Firms are price takers. This means that goods and services are determined by demand and supply

Front 4

Adv of perfect competition market

Back 4

1) consumers sovereignty. As produces produce what is demanded in the market

2) high quality of goods

3) low prices

4) efficiency of resources

Front 5

Disadvantages of perfect competition market

Back 5

1) business may not be able to expand and enjoy economies of scale

2) homogeneous products affect consumers choice as they have less variety of goods

Front 6

Def of monopoly

Back 6

A market structure with a single supplier of goods and services

Front 7

Characteristics of monopoly

Back 7

1) firms are price makers. This because a firm has power to control market price

2) strong barriers to enter into monopoly market. Such as customer loyalty, legal barriers

3) low degree of competition

4) imperfect market due to a single dominant firm in the market

5) a firm has a high degree of market share

Front 8

Adv of monopoly

Back 8

1) since monopoly earns supermodel profits, it can be user on research and development. This will lead to better info about the market and develop new products

2) monopoly benefits economies of scale

Front 9

Why do monopolies continue

Back 9

This is due the existence of barriers to entry and exits. One type of barrier is legal barrier, this may be a form of a government act. Another barrier is the scale of production. Another is bran loyalty. Sunk costs which are te cost such as advertisment which cannot be recovered if a firm leaves the industry

Front 10

Behaviour of monopoly

Back 10

A monopoly has control over the supply of the product but it can seek to influence demand. In fact monopoly has to make a choice. It can set the price and then accept the level of sales. Or it chooses the sell a certain quantity but has to accept the price determined by which consumers are willing to buy it for.

Front 11

Factors that determine the size of a firm

Back 11

1) age of the firm. Firms start small, and once they survive, they will take some time to grow

2) the size of the market. The larger the market, the larger the demand and the larger firms

3) internal and external disconomies of scale. A firm which is experiencing a lower average cost as it expan, can lose the price and capture market share

4) availability of financial capital. More financial capital a firm has a larger capability of growing

5) type of business organisation. For E.g. PLC can easily acquire financial capital through shares

Front 12

What’s internal growth

Back 12

This is when a firm increases the market for its current products or diversifying into other products

Front 13

What’s internal growth

Back 13

This is when a firm increases the market for its current products or diversifying into other products

Front 14

What’s external growth

Back 14

This involves a firm joining another with another firm to for one firm through merger or take over

Front 15

What’s internal growth

Back 15

This is when a firm increases the market for its current products or diversifying into other products

Front 16

What’s external growth

Back 16

This involves a firm joining another with another firm to for one firm through merger or take over

Front 17

List the types of integration

Back 17

1) horizontal integration

2) vertical integration

3) conglomerate integration

Front 18

What’s internal growth

Back 18

This is when a firm increases the market for its current products or diversifying into other products

Front 19

What’s external growth

Back 19

This involves a firm joining another with another firm to for one firm through merger or take over

Front 20

List the types of integration

Back 20

1) horizontal integration

2) vertical integration

3) conglomerate integration

Front 21

What’s horizontal integration

Back 21

Is the merger of two firm at the same stage of production producing the same product