Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Work And Leisure > Market Structures And Competitive Behaviour In Leisure Markets > Flashcards

Market Structures And Competitive Behaviour In Leisure Markets Flashcards

1
Q

What are fixed costs?

A

Costs that do not change in the short run with changes in output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are variable costs?

A

Costs that vary with output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define marginal cost?

A

Change in total cost resulting from changing output by one unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Define the long run

A

The period of time when it is possible to alter all factors of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the minimum efficient scale?

A

The lowest level of output at which full advantage can be taken of economies of scale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are internal economies of scale?

A

Economies of scale that occur within the firm as a result of its growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Give the 6 types of economies of scale - describe if necessary

A

Purchasing economies - buying in bulk
Selling economies - making fuller use of sales and distribution facilities
Technical economies of scale - affording to use high tech equipment
Managerial economies of scale - larger firms employing specialists
Financial economies of scale - larger firms finding it cheaper and easier to raise finance
Risk-bearing economies - as output rises, a firm can afford to produce a greater range if products, reducing the impact of falling demand for one product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are external economies of scale?

A

Economies of scale that result from the growth of an industry and benefit firms within the industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Give benefits of external economies of scale

A

Larger industries allow specialisation and hence productivity
All the firms benefit from good reputation
Improved infrastructure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Define internal diseconomies of scale. Describe why it occurs.

A

Diseconomies of scale experience by a firm cause by its growth. It occurs due to difficulty in managing a larger company, time taken for decisions to process, worsened industrial relations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Define external diseconomies of scale. Describe why it occurs

A

Diseconomies of scale resulting from the growth of an industry, affecting firms within the industry. Increased competition and hence price of resources, higher pollution levels

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is a price taker?

A

A firm that has no influence on price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is perfect competition?

A

A market structure with many buyers and sellers, free entry and exit and a homogenous product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is unit elasticity of demand

A

When a given percentage change in price equals an equal percentage change in demand, leaving total revenue unchanged

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Give influences on revenue

A 
Demand
Market power
Pricing strategy
Market structure 
Income 
Prices of related products
Weather and special events
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Give 3 main market structures

A

Monopoly
Oligopoly
Monopolistic competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is limit pricing?

A

Setting a price low to discourage the entry of new firms into the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Give typical barriers to entry

A

Brand names
High start up costs
Limit pricing
Economies of scale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the 3 main barriers to exit?

A

Sunk costs
Advertising expenditure
Contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Give characteristics of a monopoly

A

High barriers to entry and exit, supernormal profits, profit maximisation, unique product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

At what diagrammatical point are profits maximised?

A

Where marginal revenue equals marginal cost

22
Q

What are supernormal profits?

A

Profits where average revenue exceeds average cost

23
Q

What is normal profit?

A

The level of profit needed to keep a firm in the market in the long run

24
Q

What is a natural monopoly?

A

A market whereby long run average costs are lowest when output is produced by one firm

25
Q

Define oligopoly

A

A market structure dominated by a few large firms

26
Q

Give characteristics of an oligopoly

A

High barriers to entry and exit, supernormal profit, differentiated product, interdependent firms, high non-price competition

27
Q

What diagram shows the problems of price cutting?

A

Kinked demand curve

28
Q

Give forms of non-price competition

A

Large scale advertising, competitions, free gifts and brand names

29
Q

Describe how the kinked demand curve shows dangers of price cutting

A

Above price of P, demand is elastic, as firms will not follow any price increases, and so any firms that do will lose sales.
Below P, demand is relatively inelastic, as any price cuts will simply be followed and not lead to any more sales
(P is at the kink)

30
Q

Give a controversial way that firms may reduce the risks of a price war

A

Forming a cartel

31
Q

What is a cartel?

A

A group of firms that produce separately but sell at an agreed price

32
Q

What is tacit collusion?

A

Price leadership

33
Q

What is game theory

A

A theory of how decision makers are influenced by the actions and reactions of others

34
Q

What is monopolistic competition?

A

A market structure in which there is a large number of small firms selling a similar product

35
Q

What are the characteristics of monopolistic competition?

A

Large number of small firms, easy entry and exit, product differentiation, non price competition, normal profit

36
Q

Describe how supernormal profits can occur in the short run, yet only normal in the long run of monopolistic competition

A

Any supernormal profits being made result in more firms being attracted to the market, increasing supply and lowering price back down to the normal level

37
Q

Give ways in which monopolistically competitive firms look to increase consumer loyalty

A

By making their products as distinctive as possible, through small scale advertising, after sales service, better location of outlets and improved quality

38
Q

In what ways are monopolists inefficient?

A

AC is not minimised, firms may fail to provide quality of goods desired by consumers, dynamic efficiency may not occur due to lack of incentives. All attributing to X inefficiency, as a lack of competitive pressure and organisational slack

39
Q

How may monopolists and oligopolistic be efficient?

A

Through economies of scale, and they can use their supernormal profits to innovate. Firms outside the market will also have to develop superior products to enter the market, in order to overcome the barriers

40
Q

What is organisational slack?

A

Where lack of pressure to keep costs low results in managers awarding themselves high pay, taking long lunch breaks etc

41
Q

Give drawbacks to monopolistic competition

A

Fails to reach allocative efficiency, restricts production to maximise profit, productively inefficient in how they produce with excess capacity

42
Q

Give advantages of monopolistic competition

A

Consumers benefit from the variety of products, and the amount of firms competing spurs innovation and research

43
Q

What is a contestable markets?

A

A market in which there are no barriers to entry and exit, and the costs facing both incumbent and new firms are equal

44
Q

Benefits of contestable markets?

A

It is both productively and allocatively efficient. The threat of competition ensures efficiency

45
Q

What is hit and run competition?

A

Firms quickly entering a market when there are supernormal profits and leaving

46
Q

What areas does regulation alter?

A

Barriers to entry and exit, prices charged, product standards etc

47
Q

Give main aims of firms

A 
Profit satisfying
Salves revenue maximisation
Profit maximisation
Growth maximisation
Utility maximisation 
Provision of merit goods 
Survival
48
Q

What are the two main criticisms of the idea of profit maximising

A

It can be very costly and difficult to calculate marginal cost and so firms may simply use a more simple method to pricing
There is a separation of ownership and control, where managers have other objectives

49
Q

Why may a firm seek sales revenue maximisation?

A

Because managers salaries are more often linked to sales growth than profit performance. High sales attract finance and so greater economies of scale may be achieved

50
Q

What is profit satisficing? What’s the benefit?

A

Aiming for a satisfactory level of profit rather than the highest level possible. It means varying objectives can be pursued

51
Q

What is the main conflicting objective to profit maximisation? What is it?

A

Utility maximisation, the aim of trying to achieve as much satisfaction as possible

52
Q

Define short run

A

The time period when at least one factor of production is fixed

Work And Leisure (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions