external influences - miss blackwell

Question 1

define demand

Answer 1

the quantity of a good / service that customers are willing and able to buy at any given price

Question 2

define supply

Answer 2

the quantity of a good / service that sellers are willing and able to sell at any given price

Question 3

equilibrium price

Answer 3

when demand is equal to the supply

Question 4

3 determinants of demand

Answer 4

• trends and fashion
• advertising
• wealth

Question 5

define price

Answer 5

amount customers pay for a product

Question 6

define cost

Answer 6

amount spent by a business making/supplying/ buying a product

Question 7

3 determinants of supply

Answer 7

• price
  -tax
• price of other products

Question 8

define price elasticity of demand

Answer 8

shows how responsive demand is to change in price

Question 9

inelastic demand

Answer 9

quantity demanded is insensitive to a change in price
- eg: petrol - necessity product

Question 10

elastic demand

Answer 10

quantity demanded is sensitive to a change in price
- eg: holidays abroad - not a necessity product

Question 11

define competition

Answer 11

rivalry amongst sellers

Question 12

define market

Answer 12

any situation where buyers and sellers are in contact in order to establish price

Question 13

characteristics of a non physical market

Answer 13

• grown rapidly
• offer every convienience
• can be online or digital

Question 14

characteristics of physical markets

Answer 14

• ## personalisation can be offered

Question 15

define online

Answer 15

when you buy something through technology and wait for it to be delivered to you

Question 16

define digital

Answer 16

when you download and buy a product which is yours straight away - video game

Question 17

define competitive market theory

Answer 17

• a market in which there is a huge amount of sellers
• businesses mainly compete upon price
• low prices to get the most sales

Question 18

define monopoly theory

Answer 18

a market dominated buy one seller only
- high prices as can take advantage of customers

• in reality the CMA made a monopoly mean that it is any firm with more than 25% of the industries sales

Question 19

define oligopoly

Answer 19

exists where a market is dominated by a few firms
- the mobile network

Question 20

characteristics of an oligopoly

Answer 20

• product and prices in the market are similar
• businesses compete on non price differences
• sometimes oligopolies collude

Question 21

define monopolistic competition

Answer 21

a market structure with many competing firms each of whom supplies a slightly different product
- eg : hairdressers

Question 22

define market size

Answer 22

the collective value of the goods and services that buyers purchase

Question 23

define market growth

Answer 23

the percentage change in the size of the market, measured over a specific period

Question 24

define market share

Answer 24

the percentage of sales that a business has in a specific market

Question 25

5 ways to increase market share

Answer 25

- follow / adapt to a trend - advertising on social media - improve quality - stockpile so no selling out - lower prices

Question 26

define barriers to entry

Answer 26

the factors that could prevent a firm from entering and competing in a market

Question 27

factors which stop people from entering a market

Answer 27

- large start up costs ( machinery and premises ) - will need to break loyalty between other brands and customers -inability to gain ecomomies of scale

Question 28

define barriers to exit

Answer 28

the factors that could prevent a firm from leaving a market even if it wanted to

Question 29

factors which stop people from exiting a market

Answer 29

- difficulty of selling off capital ( shelves, tills, machinery ) - high redundency costs - contract with suppliers

Question 30

define market power

Answer 30

- the ability of a firm to influence or control the terms and conditions on which goods are bought and sold

Question 31

define market dominance

Answer 31

the business with the most market share in a specific market

Question 32

define merger

Answer 32

when two companies join together to form a new , larger business

Question 33

define acquisition/takeover

Answer 33

when control of another company is achieved by buying a majority of its shares

Question 34

4 external growth advantages

Answer 34

- may gain new management with different skills and talents -will result in an increase in revenue amd therefore market share - may be able to meet customer needs more effectively - economies of scale

Question 35

4 external growth disadvantages

Answer 35

-communication problems - may take on extra debts business struggles to pay back -higher prices - employees could result in redundancy

Question 36

define organic growth

Answer 36

expansion from within a business

Question 37

3 examples of organic growth

Answer 37

- opening new stores - employing more workers - launching new products

Question 38

3 advantages of organic growth

Answer 38

- less risk than external growth bcos of no mergers/aquisitions - growth can be financed internally thru retained profits - growth rate can be grown at more steady rate

Question 39

3 disadvantages of organic growth

Answer 39

-harder to build market share if the market already has a leader - slow growth so bad for shareholders

Question 40

what are 3 things the CMA aims to do

Answer 40

- work to encourage competition - investigates mergers and aquisitions which could restrict competition - looks into where there might be abuses of dominant positions

Question 41

3 examples of the cartel offence

Answer 41

- market sharing - price fixing - bid rigging