Market Structure Flashcards
What is a public good?
A good available through the free market and doesn’t decline or exclude ( street lights, prisons)
What is a merit good?
A good available through the free market but can be underproduced (education, healthcare)
What are the two types of business in the private sector?
Incorporated and unincorporated
What differentiates incorporated businesses to unincorporated?
Unincorporated business owners are not seen as having a separate identity to their business.
What is a sole trader?
A business ran by a single owner, who employs whoever and has unlimited liability.
What is a partnership?
A business ran by 2-20 owners, employing whoever and having unlimited liability.
What is a private limited company?
A small/medium business, where only family or a small group of people can buy shares. Has limited liability.
What is a public limited company?
A company with over £50,000 in capital, a minimum of 2 stakeholders and directors and a secretary, with their stocks being sold on Stock Exchange. Also have limited liability.
State 2 advantages of sole traders
1) Can make own decisions
2) Get majority of profit
State 2 disadvantages of sole traders
1) Unlimited liability
2) Only source of finance
State 2 advantages of a partnership
1) More finance and skill
2) Sharing of workload
State 2 disadvantages of a partnership
1) Owners can disagree
2) Profit is split
State 2 advantages of a LTD
1) Limited liability
2) Shareholders have best interests
State 2 disadvantages of a LTD
1) Shares only to be sold to a limited number of people
2) Many regulations
State 2 advantages of a PLC
1) Limited liability
2) Stock Exchange attracts buyers
State 2 disadvantages of a PLC
1) Shareholders can corrupt owner
2) Many regulations
Name the 4 types of co operatives.
1) Retail societies (bulk)
2) Trading societies (distribute and sell services)
3) Worker co operatives (owned by members)
4) Housing co operatives (manage rented lots)
Give 2 advantages of co operatives
1) Members have control
2) Limited liability
Give 2 disadvantages of co operatives
1) Members have to provide finance
2) Banks are reluctant to loan
What is direct competition?
Businesses selling homogeneous products or services.
What is indirect competition?
Businesses selling alternative products or services.
What 4 reasons make businesses want to compete?
1) Stand out
2) Gain customers
3) Maximise profit
4) Dominate market
What is monopoly competition?
One business having more than 25% of market share, which is illegal.
Why are monopoly businesses good?
Large profits for innovation and is a well-known place for buyers.
