Markets Flashcards
Define the term market?
a place where buyers and sellers meet to exchange goods/ services
Define the term monopoly?
Where there is only one dominant business or single producer within a market
Define the term oligopoly?
Where there are many firms in a market but it is dominated by a few large competitors
Define the term monopolistic competition?
where a large number of relatively small businesses are in competition with one another but they all sell slightly different products
Define perfect competition?
large number of businesses competing each of whom produce a low percentage of total market output and cant affect the prevailing market price
State two features of a monopoly
Price maker,
Barriers to entry,
Unfair competition,
Tend to be heavily regulated.
State two features of an oligopoly?
Differentiated products
Stable pricing
Barriers to entry
State two features monopolistic competition?
Business has some control over the price
Few/ low barriers to entry
Products are similar but not exact substitutes
State two features of perfect competition?
Infinite number of individual buyers
Products can be easily substituted
No market leaders or price leaders
perfect knowledge
price takers
Define the term barriers to entry?
make it difficult or impossible for new competitors to entre the market
State three examples of barriers to entry?
Strong brand identity
High capital
economies of sale
access the factors of production
access of distribution networks
behaviour of existing firms
Define the term demand?
The amount of good or service that a customer is willing and able to purchase at a given price with a given time period
Define the term supply?
amount of goods or services sellers are able and willing to provide at time at a given price
Define price equilibrium?
when quantity demanded is equal to quantity supplied
State three factors which can affect demand for a product/service?
price
income
interest rates
change in the price of substitutes
change in tastes/fashions
change in price of complements
change in legislation
state three factors that will effect the supply of products?
price
cost of production
VAT/ Corporation tax
subsidies
the weather
improvement in technology
What would happen to the equilibrium price if there was an increase in demand?
increase
What would happen to the equilibrium price if there was a decrease in demand?
decrease
What would happen to equilibrium price if there was an increase in supply?
fall/ decrease
what would happen to the equilibrium price if there was a decrease in supply?
increase
Define the term price elasticity of demand?
measures the responsiveness of a change in demand for a good/ service that results in a change in price of that product.
Define the term price elastic?
a change in price will lead to a more than proportionate change in demand.
Define the term price inelastic?
a change in price will lead to a less than proportional change in quantity demanded
Is this PED price elastic or inelastic? = -1.5
elastic
Is the PED price elastic or inelastic? =-0.5
inelastic
Is PED price inelastic or price elastic? = -6
elastic
Define the term income elasticity of demand?
measures the change in demand for a good or service that has been caused by a change in peoples income?
Define the term inferior good?
goods that have a negative income elasticity of demand eg. supermarket own food brand
Define the term normal good?
normal goods have positive income elasticity of demand eg. cars furniture
Define the term luxury good?
are more sensative to changes in real income and as people get more money they buy more of these products eg. luxury clothes
State two reasons consumers need protection from businesses
Profit motive,
unsafe or defective products
unfair advertising/ misleading information
pressurised sales tactics
online buying can be misleading
globalisation
description of goods
scientific advances
State the role of ombudsman
investigate complaints made by citizens about businesses
State the role of the CMA?
to investigate takeovers, mergers, anti-competitive practices
conduct market studies
bring criminal proceedings against people
