PART 2 Flashcards
TRUE OR FALSE: In economic analysis, the main concern is to realize the maximum profit.
True
The gap or difference between revenue and cost
Profit
TRUE OR FALSE: One Seller = High Profit
True
TRUE OR FALSE: Limited Market Power = Minimal Profit
False (Medium Profit)
TRUE OR FALSE: Perfect Competition = High Profit
False (Minimal Profit)
TRUE OR FALSE: Highly Differentiated Product = High Profit
True
TRUE OR FASLE: Monopoly = High Profit
True
TRUE OR FALSE: Monopolistic Competition = Minimal Profit
False (Medium Profit)
TRUE OR FALSE: No Market Power = Minimal Profit
True
TRUE OR FALSE: Scale and Legal Barriers, Gov’t Barriers = High Profit
True
Refers to the number of sellers and buyers in the market.
Market Concentration
TRUE OR FALSE: The more concentrated the market, the more producers are there in the industry.
FALSE
Refers to inherent features of the industry and the various means devised in the market to prevent the entry of potential players and competitors that want to take advantage of the enormous profit in industry
Barriers to Entry
Two Categories of Market Barriers
Scale Barriers and Legal Barriers
Refers to requirements for a large production plants for a feasible operation in the industry
Scale Barriers
Refer to proprietary rights and their corresponding legal protection extended to existing market players in the production and distribution of a product or service
Legal Barriers
This factor refers to the ability of a business firm to create a market niche through several means of varying its products and services.
Product Differentiation
This element refers to the unevenness in the distribution of information among the actors in the market
Limited Information
There are many sellers, none of which controls the prices and output of the whole industry
Pure Competition
There is only one seller who represents the whole industry.
Pure Monopoly
There is only one product or service with no substitutes
Pure Monopoly
Due to severe barriers to entry no other entities can compete in the market
Pure Monopoly
There are a few sellers of differentiated products with strict barriers to entry.
Oligopoly
There are many sellers with unique products, each trying to gain a competitive advantage
Monopolistic Competition
Two forms of barriers to entry
Industry Barrier and Government Intervention
Initial capitalization of a business is very expensive
Industry Barrier
Licenses are difficult to secure or taxes are very high.
Government Intervention
TRUE OR FALSE: Industry Barrier and Government Intervention are both present in pure competition.
False
It refers to the type of customers and their number as well.
Market
TRUE OR FALSE: Knowing and understanding your customers are essential to identify the service or good to present to the market
TRUE
It refers to categorizing your customers according to demographic and geographic groups.
Market Segmentation
This describes the kind of customers you have in terms of gender, age, and income.
Demographics
refers to belonging to a certain place
Geographic Segment
Defined as the source of materials used in production by a producer, a seller, or a manufacturer.
Supplier
Goods that can replace other goods because of similarities, appearances, use, among others.
Substitutes
