Theme 3 AO1 Flashcards
In perfect competition, are firms profit maximisers?
Yes
In perfect competition, are products the same?
Yes, all products are homogenous.
In perfect competition, is it easy to enter/exit the market?
Yes
In perfect competition, how many participants are involved?
There is a high amount of buyers and sellers.
In perfect competition, are there any information gaps?
No, perfect information exists for both buyers and sellers.
In perfect competition, do firms dictate their own prices?
No, firms are price takers and charge the price that is set by the market.
Are monopolies profit maximisers?
Yes.
Do monopolies set their own prices?
Yes, to some extent.
What type of profit do monopolies make?
Supernormal profit.
About markets with monopolies, are there high barriers to entry/exit?
Yes as the monopoly dominates the market.
About markets with monopolies, how many participants are there?
There are a small number of large firms but there may be a larger number of small firms already existing in the market.
In monopolistic competition, are there a high number of participants?
Yes, there are many producers and many consumers.
In monopolistic competition, are all products similar?
No, all products are highly differentiated.
In monopolistic competition, do firms dictate their own prices?
Firms have some control over their prices.
In monopolistic competition, are there high barriers to entry/exit?
No, barriers to entry/exit are low.
