markets Flashcards
What is a cartel?
When businesses in an oligopoly collude to keep prices high and divide the market among themselves.
Name two advantages of an oligopoly for consumers.
1.Economies of scale lower costs.
2.High profits allow for innovation and investment.
What is perfect competition?
A market with many small firms producing identical products with no excessive profits.
two characteristics of perfect competition
- No one business influences the market.
- Goods are homogeneous (identical).
Do consumers have full market information in perfect competition?
Yes, they are fully informed about prices and products.
What is monopolistic competition?
A market where elements of monopoly allow some control over market prices, but many small businesses still compete.
two characteristics of monopolistic competition.
1.Large number of small businesses competing.
2.Products are similar but differentiated.
Do businesses in monopolistic competition have full control over pricing?
No, they have limited control over prices.
What is an oligopoly?
A market where many businesses exist, but only a few dominate.
two characteristics of an oligopoly.
- Strong brand identity with differentiated products.
- Some barriers to entry.
What is a price war in an oligopoly?
A short period where businesses aggressively lower prices to compete.
