Markets Flashcards
What are market structures separated by?
Levels of competition and market conditions.
What are the four types of Markets?
Monopoly, oligopoly, monopolistic competition and perfect competition.
Describe perfect competition.
Large number of businesses,
Each business is not large enough to influence another,
There are no market leaders and no price leaders,
Business must accept the going price on the market place (price takers),
The goods are homogeneous which means there is no difference in goods sold by each business (no branding, no product differentiation),
All businesses have equal access to tech and benefit from economies of scale,
Each business has the full market info and a wide number of suppliers,
There are no barriers to entry or exit,
This is an unrealistic condition but just acts as a model.
Describe a Monopoly market.
There is a single product within the market, this is called pure monopoly,
Barriers to prevent others from entering the market,
The businesses are price makers,
Very rare and benefit from economies of scale.
Describe Monopolistic competition.
A large number of small businesses,
Few barriers to entry,
Similar products but still differentiated,
Brand identity is weak,
The businesses are not price takers but have limited degree of control over prices being changed.
Describe oligopoly (oligopolistic) competition.
Many businesses but only a few are dominate,
There is a strong brand identity with differentiated products,
There is brand loyalty through advertising and promotion,
Barriers to entry do exist,
Increased start up costs in relation to manufacturing,
Prices stable for long periods however short price wars do occur,
When strong businesses act together collide it is called a cartel, they keep prices up and share market between them, this is illegal.
What are the two different markets?
Local and global.
What can businesses be focused on?
Consumer market and other businesses.
What is mass marketing?
When businesses targets advertising and promotional spending at whole market not a particular segment.
How does mass marketing take advantage of economies of scale?
Increases production output and capacity.
