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Business Component 1 > Market Structure > Flashcards

Market Structure Flashcards

1
Q

What is a public good?

A

A good available through the free market and doesn’t decline or exclude ( street lights, prisons)

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2
Q

What is a merit good?

A

A good available through the free market but can be underproduced (education, healthcare)

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3
Q

What are the two types of business in the private sector?

A

Incorporated and unincorporated

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4
Q

What differentiates incorporated businesses to unincorporated?

A

Unincorporated business owners are not seen as having a separate identity to their business.

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5
Q

What is a sole trader?

A

A business ran by a single owner, who employs whoever and has unlimited liability.

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6
Q

What is a partnership?

A

A business ran by 2-20 owners, employing whoever and having unlimited liability.

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7
Q

What is a private limited company?

A

A small/medium business, where only family or a small group of people can buy shares. Has limited liability.

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8
Q

What is a public limited company?

A

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.

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9
Q

State 2 advantages of sole traders

A

1) Can make own decisions

2) Get majority of profit

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10
Q

State 2 disadvantages of sole traders

A

1) Unlimited liability

2) Only source of finance

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11
Q

State 2 advantages of a partnership

A

1) More finance and skill

2) Sharing of workload

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12
Q

State 2 disadvantages of a partnership

A

1) Owners can disagree

2) Profit is split

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13
Q

State 2 advantages of a LTD

A

1) Limited liability

2) Shareholders have best interests

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14
Q

State 2 disadvantages of a LTD

A

1) Shares only to be sold to a limited number of people

2) Many regulations

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15
Q

State 2 advantages of a PLC

A

1) Limited liability

2) Stock Exchange attracts buyers

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16
Q

State 2 disadvantages of a PLC

A

1) Shareholders can corrupt owner

2) Many regulations

17
Q

Name the 4 types of co operatives.

A

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)

18
Q

Give 2 advantages of co operatives

A

1) Members have control

2) Limited liability

19
Q

Give 2 disadvantages of co operatives

A

1) Members have to provide finance

2) Banks are reluctant to loan

20
Q

What is direct competition?

A

Businesses selling homogeneous products or services.

21
Q

What is indirect competition?

A

Businesses selling alternative products or services.

22
Q

What 4 reasons make businesses want to compete?

A

1) Stand out
2) Gain customers
3) Maximise profit
4) Dominate market

23
Q

What is monopoly competition?

A

One business having more than 25% of market share, which is illegal.

24
Q

Why are monopoly businesses good?

A

Large profits for innovation and is a well-known place for buyers.

25
Q

Why are monopoly businesses bad?

A

Can price fix and makes it difficult for smaller businesses to establish themselves.

26
Q

What is oligopolistic competition?

A

Few oligopolists having dominance of market share.

27
Q

What is monopolistic competition?

A

Many organisations that customers can differentiate sharing the market.

28
Q

What is perfect competition?

A

Many organisations that customers cannot differentiate sharing the market.

29
Q

Define the term ‘competitiveness’

A

The ability to sell products and services successfully within their market.

30
Q

What are incentive schemes?

A

Ways to motivate staff.

31
Q

Why do governments boost competition?

A

1) So prices don’t get fixed

2) So customers are attracted and satisfied, producing more tax

32
Q

How do governments boost competition?

A

1) Fining monopoly businesses

2) Schemes to encourage start ups

Business Component 1 (11 decks)

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