external influences - the market, market size and growth

Question 1

explain what is meant by a market

Answer 1

any place where buyers and sellers can meet

Question 2

explain what is meant by competitive market

Answer 2

a market in which there are a large number of sellers – they compete mainly on price

Question 3

what is a monopoly?

Answer 3

a market dominated by one seller

Question 4

what is the CMA’s definition of a monopoly?

Answer 4

a pure monopoly is when a business dominates 100% of its market. in reality, the CMA describe it as any firm with more than 25% of the industry’s sales

Question 5

what is an oligopoly?

Answer 5

exists where a market is dominated by a few large firms (e.g. mobile phone networks, airlines, smart phone brands)

Question 6

describe some of the features of an oligopoly

Answer 6

• the products and prices are very similar
• business may need to compete on non-price differences

Question 7

for a competitive market, what is the number of firms like?

Answer 7

lots of firms

Question 8

for a competitive market, what are the prices like?

Answer 8

low

Question 9

for a monopoly market, what is the number of firms like?

Answer 9

one

Question 10

for a monopoly market, what are the prices like?

Answer 10

high

Question 11

give an example of a competitive market

Answer 11

farming

Question 12

give an example of an monopolistic market

Answer 12

pure gym market share of 34%

Question 13

describe the key features of an oligopoly (number, price)

Answer 13

few firms, high and similar prices

example: airlines

Question 14

define monopolistic competition

Answer 14

a market structure with many competing firms each of whom supplies a slightly differentiated product

Question 15

what do some oligopolists do?

Answer 15

collude which means they secretly agree on something. this includes keeping prices higher than if the market was competitive
this may force other firms out of market

Question 16

how many firms are in a monopolistic competition?

Answer 16

several (many)

Question 17

what are the prices like in a monopolistic competitive market?

Answer 17

fair/similar

Question 18

what is an example of a monopolistic competitive market?

Answer 18

• hair dresser
• coffee shops
• bars
• nightclubs

Question 19

what does market size mean?

Answer 19

the collective value of the goods/services that buyers purchase

Question 20

what does market growth mean?

Answer 20

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

Question 21

what is the formula for market growth?

Answer 21

(difference/original) x 100

Question 22

define market share?

Answer 22

the percentage of total sales (by value) that a business has in a specific market

Question 23

what are five strategies a business could use to increase market share?

Answer 23

• know customer needs and meet them
• sell more to existing customers
• find out why old customers no longer use your products
• use a variety of marketing techniques e.g. pricing, adverts, promotion
• merge with a competitor

Question 24

how could a business increase its market share in a shrinking market?

Answer 24

• diversify into new markets
• merge or take over another competitor
• use a variety of innovation