What is meant by markets ? Flashcards
What is a market ?
Where buyers and sellers come together to agree a price / carry out a transaction
What are the 2 types of markets ?
Physical markets ( face to face )
Online markets ( business to consume or Business to Business )
Why is market price important ?
Competition exists - they try and use marketing to stand out / justify prices
Mark up set is affected by market price - if market prices rise so does the mark up
How is competition important in markets ?
Lots of companies produce similar items
They accept the market price - if they raise it then people go to another company
Competition is based on price
What is a monopoly ?
When the market is dominated by one business - they are the only supplier and charge what they want
What is monopolistic competition ?
There is a large numbers of businesses and consumers
Products are similar and have monopoly over brand name
What is an oligopoly ?
Market is dominated by a few firms
Small firms follow the oligopolies
If one rasies prices then the rest follow
What is market size ?
Number of potential buyers and sellers selling a product or service
Why is competition good ?
encourages innovation
Makes firms keep costs low for consumers
What are economies of scale ?
Benefits firms get on a large scale e.g bulk buying and the ability to gain larger loans
What does competition not benefit ?
Consumers - low costs = low wages
Shareholders - lowers dividends due to mark ups
Suppliers - Take it or leave it
What is market dominance ?
Strength of a business compared to its competitors
