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A Level Economics > Market Structures > Flashcards

Market Structures Flashcards

1
Q

What are the 5 types of Market Structures?

A

Monopoly

Perfect Competition

Monopsony

Oligopoly

Monopolistic competition

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2
Q

What does N-Firm Concentration Ratio show?

A

How much market share N largest firms have

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3
Q

What is bounded rationality

A

Limited mental processing abilities

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4
Q

What are the three assumptions of a monopoly

A

Only one firm in the market

Profit maximisers

High barriers to entry

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5
Q

What is a pure and legal monopoly?

A

Pure has 100% market share

Legal has more than 25%

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6
Q

What are the 4 types of barriers to entry

A

Sunken costs

Legal barriers

Economics of scale

Brand loyalty

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7
Q

What are legal barriers?

A

Patents
Copyright
Trademarks

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8
Q

What are sunk costs?

A

Costs you can’t get back. For example, advertising or specialised machinery.

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9
Q

What are the six types of internal economies of scale

A

Richards mum flies passed the moon:
Risk-bearing, managerial, financial, purchasing, technical, marketing

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10
Q

What is an incumbent firm?

A

A firm already in the market

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11
Q

What are the four measures of efficiency?

A

Productive

Allocative

Dynamic

X efficiency

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12
Q

What is productive efficiency?

A

When average cost is at its lowest
When mc = ac

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13
Q

What is allocative efficiency?

A

When welfare is maximised
When MC = AR

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14
Q

What is a natural monopoly?

A

When it is naturally most efficient for one firm to be a monopoly

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15
Q

Why do natural monopolies exist?

A

High sunk costs and huge economies of scale

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16
Q

What is price discrimination?

A

When firms charge consumers different prices for the same good

17
Q

3 conditions of price discrimination

A

Market power

Information

Limit reselling

18
Q

What does Market power mean

A

A firm has enough market share to change its prices without losing customers

19
Q

Why do firms need information to price discriminate

A

They need to know who they can discriminate

20
Q

What are the features of a perfectly competitive market?

A

Many small buyers

No barriers to entry

Homogenous goods - (goods that are the same)

Perfect information

21
Q

What is monopolistic competition

A

Many small buyers and sellers

LOW barriers to entry

DIFFERENTIATED products

22
Q

What is a differentiated good?

A

Similar but slightly different

23
Q

What happens to firms in the long run in monopolistic competition?

A

New firms will enter and steal customers which will lead to a decrease in demand and thus lead to a decrease in mr and ar until where ar just touches ac

24
Q

Features of an oligopoly

A

Few large sellers
High barriers
Differentiated goods
Interdependence

25
Q

What is interdependence

A

One firms actions will directly affect another firm

26
Q

What is overt collusion

A

A formal agreement between firms to collude

A Level Economics (13 decks)

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