market structure Flashcards
1
Q
perfect competition
A
- all homogenous products (undifferentiated)
- no barriers to entry
- many buyers and many sellers
- price takers
- aim to maximise profit
- allocative efficient
- productively efficient
2
Q
monopolistic competition
A
- some product differentiation (small-medium sized firm)
- some price setting power
- low barriers to entry
3
Q
oligopolies
A
- 5 firm concentration ratio above 50% .
- supernormal profit
- high barriers to entry
- differentiated products
- interdependence between firm
4
Q
monopolies
A
- price setters
- highly differentiated
- high barriers to entry
- profit maximisers
5
Q
advantages of being a monopoly
A
- benefit from economies of scale
- makes supernormal profit can be reinvested into R and D (dynamic efficiency)
6
Q
disadvantage of being a monopoly
A
- fewer products to choose from
- ## no guarantee that the profits will be reinvested
7
Q
natural monopoly
A
exists naturally in the industry for example thames water
8
Q
monopsony
A
one buyer of labour
