Market structures Flashcards
1
Q
7 key features of a market structure?
A
- number of firms
- market share of the largest firms
- nature of costs
- degree to which industry in vertically intergrated
- extent of product differentiation
- structure of buyers in industry
- turnover of customers
2
Q
What are the costs involved in market structures?
A
- entry costs (start up costs)
- sunk costs (exit costs)
- natural cost advantages
3
Q
What are the differant products in market structures?
A
- homogenous
- non-homogenous goods
- strong product differentiation and brand loyalty
4
Q
Examples of conduct issues ?
A
- are there dominant forms
- collusive pricing agreements
- how much control do businesses have in supply chain
- is there interdependence between firms
5
Q
Types of pricing stratergies for firms?
A
- cost plus pricing
- limit pricing
- peak pricing
- penetration pricing
- predatory pricing
6
Q
what is cost plus pricing?
A
- when a firms fixes the price by adding a fixed percentage margin to the average cost of production
7
Q
What is limit
A
when firm sets price low enough to discourage new entrants into market
8
Q
What is peak pricing?
A
- raises prices when demand peaks due to higher marginal costs of supply
9
Q
What is penetration pricing?
A
- pricing policy used to enter a new market, usually setting new price
10
Q
What is predatory pricing?
A
- setting an artificially low price for a product in order to drive away competition
11
Q
What are key features of a market structure?
A
- trends in real levels for consumers over time
- size of business profits
