Unit 2 Exam Flashcards
What is Market concentration and its indicators?
The extent to which a small number of firms dominate a market. It is often measured using indicators such as the concentration ratio or the Herfindahl-Hirschman Index (HHI).
What is Market power?
ability of a firm or group of firms to control prices or exclude competition in a market. High market power often results from high market concentration.
What is Perfect competition?
A market structure where many firms offer identical products, and no single firm can influence the market price. Entry and exit barriers are low.
What is Monopolistic Competition?
A market structure where many firms sell similar but not identical products. Firms have some control over pricing due to product differentiation.
What is Oligopoly?
A market structure dominated by a few large firms, where each firm is aware of the actions of the others. Firms in an oligopoly may engage in collusion or competitive behaviour.
What is Monopoly?
A market structure where a single firm dominates the entire market, with significant barriers to entry that prevent other firms from entering.
What is Allocative efficiency?
occurs when resources are distributed in a way that maximises consumer satisfaction. In an allocatively efficient market, goods and services are produced up to the point where the last unit provides a benefit equal to its cost.
What is productive efficiency?
occurs when goods and services are produced at the lowest possible cost, meaning that the economy is producing on its production possibility frontier (PPF).
What is Dynamic efficiency?
refers to the ability of a market to innovate and improve over time. It involves the optimal allocation of resources towards research and development to promote long-term growth.
What is competitive pressures?
often encourage firms to innovate and invest in new technologies to maintain or gain market share. This can lead to increased efficiency and consumer benefits.
What is Resource allocation?
refers to how resources (labour, capital, etc.) are distributed across the economy. Efficient resource allocation is crucial for maximizing output and consumer satisfaction.
What is The Australian Competition and Consumer Commission (ACCC)?
responsible for enforcing competition laws and promoting fair trading to enhance the welfare of Australians
Government Strategies to Increase Competition
- breaking up monopolies
- regulating prices
- encouraging new entrants.
Market Price
Current price that a particular product is sold
