Topic Three, Part 1 - Markets Flashcards
What is a market?
A ‘place’ where buyers and sellers get together to trade
What is a physical market?
buyers and sellers meet face-to-face
What is a non-physical market?
buyers and sellers do not meet face-to-face
What is a digital market?
Online market
What is a Market structure?
Behaviour and amount of firms in the market
What is perfect competition?
a market structure where many firms offer a homogeneous product
What is monopolistic competition
Products are differentiated therefore not perfect substitute’s
What is a oligopoly?
A market is shared by a small number of sellers/producers
What is a monopoly?
/
What is a Price taker?
A firm that has no influence on market price
What is a Price maker?
A firm that has the influence to set market price
What is a Competitive market?
Any market where firms strive to beat rivals
What is a Concentrated market?
Only a small number of firms operate
What is Imperfect competition?
Every market type between perfect competition and monopoly
What is Pure monopoly?
Only one seller in the market
What is Monopoly power?
A seller has enough power to be a price maker
Factors which influence monopoly power?
- Competitors
- Advertising
- Product differentiation
What is market dominance?
How strong a firms market share is compared to rivals
How can firms try to increase market share?
- catering to customers’ needs
- create new needs and the demand for them
- promotions
What are examples of natural/innocent barriers?
- start-up costs
- Production costs are higher for new entrants
- will have no brand loyalty
What are examples of artificial/man-made barriers?
- patents prevent entry for certain products
- Predatory pricing by existing f9rms
What are examples of Barriers to market EXIT?
- Selling equipment
- Paying workers redundancy payments
- Breaking contracts
What is Market growth?
The market grows when an economy is doing well
What is Organic growth of a firm?
the market isn’t growing but a firm is becoming more dominant in the market.
What is a merger?
two companies decide to join together
What is a takeover?
one company takes control of another by buying a majority stake in its ownership.
What is the Competition and Markets Authority (CMA)?
responsible to weigh up whether a merger is in the public interest
What powers do the CMA have if the business is anti-competitive?
- Fine the business up to 10% of their global turnover
- assist in lawsuits arising from the anti-competitive behaviour
