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Description
Flashcards by Tara Pugal, updated more than 1 year ago
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Created by Tara Pugal
about 8 years ago
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| Question | Answer |
| Describe a competitive market (5) | many sellers, none have dominant market share sellers producer slightly diff products (so high XED) customer loyalty is fairly weak each seller has good access to new tech customers+producers have full info |
| The more competitive a market... | the more allocatively efficient is it |
| What are monopoly's? | firms that have more than 25% of market share |
| What is an oligopolistic industry? | where a few dominant firms together have 50% of market share |
| How do monopolies develop? | from the successful organic (internal growth) of a business through mergers and acquisitions (the integration of firms) |
| What is the internal expansion of a business? | when a firm increases generates higher sales and increased market share by exploiting economies of scale |
| What are barriers to entry? | the ways that potential competitors are blocked so that monopoly's can enjoy higher profits in the LR |
| What are 3 examples of barriers to entry? | patents advertising and marketing brand proliferation |
| What are patents? | legal property rights |
| How do advertising an marketing act as barriers to entry? | they develop customer loyalty |
| How does brand proliferation act as a barrier to entry? | in many industries, multi-product firms engaging in brand proliferation can give a false appearance of competition |
| How does monopoly power = market failure? | a monopoly makes higher profits at the expense of a loss of allocative efficiency |
| What are the 3 potential benefits of monopoly? | research and development spending exploitation of economies of scale monopolies and international competitiveness |
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