market structures

Question 1

what are the 4 different market structures?

Answer 1

perfect competition, monopolistic, oligopoly, monopoly

Question 2

perfect competitor characteristics

Answer 2

•large number of firms, all have a little control over the market
•market decides price
•homogenous, product cannot differentiate
•has perfect factor mobility
•no customer loyalty needed
•no marketing required

Question 3

what is perfect factor mobility

Answer 3

the 4 factors of production (land, labour, capital, enterprise) can be easily changed , they are mobile

Question 4

what’s an example of perfect competition

Answer 4

producing carrots and selling them

Question 5

monopolistic characteristics

Answer 5

•imperfect competition
•products are differentiated
•small businesses (they can be national)

Question 6

monopolistic example

Answer 6

greggs, pret a manger , original cottage

Question 7

oligopoly characteristics

Answer 7

•imperfect competition
•top 5 firms are accountable for 60% of the market
•high level of market concentration
•products can be differentiated or homogenous
• a lot of capital required to enter the market
•they are interdependent

Question 8

oligopoly examples

Answer 8

airlines , cinemas , retailers , broadband providers

Question 9

oligopoly advantages to consumers

Answer 9

-economies of scale so can benefit from smaller price
-price wars can end up with more affordable prices
-large capital therefore they can innovate and invest into consumers
-large market segment range, so variety for consumers

Question 10

monopoly characteristics

Answer 10

-dominant market stake
-25% market share
- barriers for entry and exit
-influence of price making
-benefit from economies of scale
-profit is supernatural and is market disorienting

Question 11

monopoly examples

Answer 11

internet = google
social media= Facebook
phone providers = apple

Question 12

what is tacit collusion

Answer 12

firms coordinating their actions, eg their prices

Question 13

what is a cartel ?

Answer 13

a group of independent businesses that come together to: fix prices , limit production, to share consumers and to share markets

Question 14

What is a pure monopoly

Answer 14

the only single provider in the market, for example Royal Mail. However this is not the case anymore as they are very rare, due to intervention from the government for competition