Unit 2 Flashcards
fixed costs
do not vary with the level of output
variable costs
costs that change in proportion to the level of goods or service a business produces
bulk purchasing
the business can buy materials in larger quantities at a discount, reducing cost/unit
operational efficiency
with more production, the business can optimise its production process, reducing time and waste/product
economies of scale
Monopolies can achieve economies of scale, meaning they can produce goods or services at a lower cost/unit due to their large scale of production
oligopoly
An oligopoly exists where a market is dominated by a few firms. Eg phone networks.
competitive market
a large number of firms
don’t compete on price
no barriers to entry
very little product differentiation
example: farm and dairy
monopoly
one firm in the market
high ability to control price
regulation - government regulation
no products competing
example: utilities, gas
monopolistic competition
many sellers
limited ability to control price
few barriers to entry
lots of product differentiation
mobile phone networks, airlines
ways to increase market share:
discounts
advertising/ promotion
change pricing strategy
merge with competitor
market research
market power
the ability of a firm to influence or control the terms and conditions on which goods are bought and sold
market dominance
a measure of market share compared to competitors
barriers to entry
the factors that could prevent a firm from entering and competing in a market
merger
where teo companies join together to form a new, larger business
acquisition/ takeover
this is where control of another company is achieved by buying a majority of its shares (external growth)
