Market structures

Question 1

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Pure monopoly

Answer 1

When only one firm supplies the market

Question 2

Perfect competition

Characteristics

Answer 2

• large number of buyers and sellers
• low if any barriers to entry
• perfect knowledge
• homogenous goods
• firms are price takers

Question 3

Profit maximisation

and where does it occur

Answer 3

When a firm seeks to make the largest positive difference between total revenue and total costs. This occurs where mr=mc

Question 4

Main objective of firms

Answer 4

Profit maximisation
* reinvest funds to develop new products and gain more customers
* pay out higher returns to shareholders therefore encouraging more people to buy shares in the company
Other objectives may be:
* sales max (costa)
* survival (fast food)
* Growth (netflix)
* Increasing market share

Question 5

Divorce of ownership from control

Answer 5

The seperation that exists between owners of the firm (shareholders) and directors in large public limited companies.
The objectives of directors may be:
* growth max
* sales max
* satisficing

Question 6

Imperfect competition

Answer 6

any market structure that is not perfect competition