Market Structues Flashcards
Barriers to exit?
Factors which make is difficult or impossible for firms to cease production and leave and industry.
Barriers to entry?
Factors which make it difficult or impossible for firms to enter an industry and compete with existing producers.
Brand?
A name, design,symbol or other feature that distinguishes a product from other similar products and which makes it non-homogeneous.
Concentration ratio?
The market share of the largest firms in an industry.
Homogeneous goods?
Goods made by different firms but are identical.
Imperfect competition?
A market structure where there are several or a relative large number of firms in the industry, each of which has the ability to control the price that it sets for its products.
Limit pricing?
When a firm, rather than run profit maximisation, sets a low enough price to deter new entrants from coming into its markets.
Market concentration?
The degree to which the output of an industry is dominated by its largest producers.
Market share?
The proportion of sales in a market taken by a firm or group of firms.
Market structure?
The characteristics of a market which determine the behaviour of firms within a market.
Natural monopoly?
Where economies of scale are so large relative to market demand that the dominant producer in the industry will always enjoy lower costs of production than any other potential competitor.
Non-homogeneous goods?
Goods which are similar but not identical, made by firms, such as branded goods.
Perfect knowledge or information?
Exists if all buyers in the market are fully informed of prices and quantities for sale, whilst producers have equal access to information about production techniques.
Sunk costs?
Cost of production which are non recoverable if a firm leaves the industry.
