Non-competitive markets

Question 1

What is a non-competitive market?

Answer 1

A non-competitive market is where there are few firms who try to compete for the same customers. They will differentiate their product, advertise and innovate in order to gain a competitive advantage, and there will also be large barriers to entry/exit

Question 2

How do producers operate in a non-competitive market?

Answer 2

Producers will:
- Differentiate products
- Advertise
- Innovate
- May be able to influence price

Question 3

What is a monopoly?

Answer 3

A monopoly is when a there is a single firm in a market with 25% or more market share. They are able to set the price as they have no competition and there are extremely high barriers to entry/exit

Question 4

What is an oligopoly?

Answer 4

An oligopoly is a market where a few large sellers dominate. They have to differentiate their products and advertise, as any change in price could lead to a price war

Question 5

What are the causes of oligopolistic and monopolistic power?

Answer 5

• High barriers to entry/exit
• Low or no competition
• Differentiated products

Question 6

What are the consequences of oligopolistic and monopolistic power?

Answer 6

• Less (or no) choice of producer
• Lower quality
• Higher prices