Markets Flashcards
What is a market?
Any place where buyers and sellers meet to exchange goods/services.
competition
Refers to the number of businesses in a market.
competitive market
A market with numerous producers that compete to provide goods and services consumers want and need.
mass market
Where a business sells to the whole market and markets the product to all consumers in the same way.
niche market
Targets a smaller segment of a larger market where customers have specific needs and wants.
market size
The total number of sales, by value or volume, in a market as a whole.
Market share?
Measures the sales of a firm relative to the total sales in the market (market size).
What is the formula for market share?
Sales of a business / Total Sales in a Market × 100.
What is market segmentation?
A process of subdividing a market into identifiable subgroups that have similar needs, wants or characteristics and providing them with goods or services that meet their needs and wants.
What defines a monopoly?
A single or dominant business within a market,
Characteristics include:high barriers to entry, price makers, and high economies of scale.
What is an oligopoly?
a few large companies dominate in terms of sales revenue/market share, alongside many small firms.
They experience high economies of scale.
What is monopolistic competition?
many relatively small businesses, no dominant businesses, and few barriers to entry.
perfect competition?
many small firms produce virtually identical products at similar prices, with the ability to enter and leave the market freely.
There are no low barriers to entry, goods sold are homogenous, and no one business is large enough to influence the activities of others.
customer protection?
Laws that prevent harm such as goods not being fit for purpose
E.g:
the Sale and Supply of Goods Act 1994,
Consumer Credit Act 1974, Trade Descriptions Act 1968 and 1972,
Distance Selling Regulations.
demand
The quantity of goods/services that consumers are willing and able to buy at a given price, at a given time.
supply
The quantity of goods/services that producers are willing and able to supply to the market at a given price, at a given time.
market equilibrium?
The price where quantity demanded is equal to quantity supplied.
What is price elasticity of demand?
Measures the sensitivity of demand to a change in price.
Formula: Percentage change in quantity demanded / Percentage change in price.
price elastic?
Price elasticity is greater than one, where the quantity demand rises or falls by a larger percentage than the price change.
price inelastic?
Price elasticity value is between 0 and 1, where a change in price results in a smaller percentage change in quantity demanded.
income elasticity of demand
It measures the responsiveness or sensitivity of demand to a change in income.
Formula: Percentage change in quantity demanded / Percentage change in income
income elastic
Income elasticity is greater than one, where the quantity demand rises or falls by a larger percentage than the income change.
income inelastic
Income elasticity is between 0 and 1, where the quantity demand rises or falls by a smaller percentage than the income change.
inferior goods
A product that has negative income elasticity. As incomes decrease, demand increases and vice versa.
