Points Test 2 (booklet 2) Flashcards
(29 cards)
Define the term market
A market is where buyers and sellers meet to exchange goods and services
Define the term monopoly
A monopoly is where there is only one dominant business or single producer in a market.
Pure monopoly one business has over 25%
Define the term oligopoly
An oligopoly is where there are many firms within a market but it is dominated by a few large competitors.
Define the term monopolistic competition
Monopolistic competition is here a large number of relatively small businesses are in competition with each other.
Eg: hairdressers
Define the term perfect competition
Large number of businesses competing each of whom produce a low percentage of market output and can’t influence market price. No one business is large enough to influence activity of others.
State 2 features of a monopoly
Price maker
Barriers to entry
State 2 features of oligopoly
Differentiated products
Barriers to entry
State 2 features of monopolistic competition
Businesses have some control over price
Low barriers to entry
State 2 features of perfect competition
Infinite number of buyers
No market and price leaders
State 3 examples of barriers to entry
High capital requirements to set up
Strong brand identity of existing firms
Economies of scale
Define the term demand/supply/price equilibrium
Demand- amount of good/service customers are willing/able to purchase at a given price in a given time period.
Supply- amount of goods/service sellers are willing to provide at a given time at a given price.
Equilibrium- quantity demanded is equal to quantity supplied
Draw a diagram to show price equilibrium
Draw and label a diagram to show the effects of equilibrium prove of an increase or decrease in supply
Draw and label a diagram to show the effects of equilibrium prove of an increase or decrease in demand
State 3 factors that can effect demand for a product or service
Price
Income
Change in price of competitors
State 3 factors than can affect supply of a product or service
Price
Weather
Change in price of compliments
State what would happen to equilibrium price if there was an increase in demand
Increase
State what would happen to equilibrium price if there was a decrease in demand
Decrease
State what would happen to equilibrium price if there was an increase in supply
Decrease
State what would happen to equilibrium price if there was a decrease in supply
Increase
Define the term price elasticity of demand
How sensitive the demand for good is to a change in price
Define the term price elastic
Demand for produce is very sensitive to a change in price
Define the term price inelastic
Demand isn’t sensitive to price change
Would the following PED values indicate a product that is price elastic or in elastic
-1.5
-6
-0.5
-1.5. Elastic
-6. Elastic
-0.5. Inelasctic
