Economics - Unit 3

Economics - Unit 3

1. Market structures

   • Oilgopoly
     • Price rigidity= stick prices
     • Concentration ratio
     • Kinked-demand curve
     • Price wars, Collusion
     • market is dominated by a few firms, high barriers
       • CMA moderate price wars
   • Monopolistic Competition
     • Profit maximisation (MC=MR)
     • Open market with few barriers, lots of differentiated products, many firms
   • Monopoly
     • One firm, high barriers, price makers
   • Barriers to entry
     • Natural= E.O.S
     • Artificial= Patents, marketing expenditure
     • First mover advantage
   • Perfect competition
     • Homogenous goods, No Barriers-to -entry
     • Buy/Sell as much as you want, Price takers
   • Contestable Markets
     • a market where there is the opportunity for new firms to enter
       • equal playing ground- same tech, no B2E
   • Price Discrimination
     • charge different prices to different people
   • Aims of businesses
     • Growth
     • Survival
     • Profit Max.

2. The Labour Market

   • Wages
     • NLW/NMW
       • Fiscal benefits: Higher tax, NI contributions
       • Work incentive, motivation and security
         • Higher disp. income= +ve multiplier
       • Reduced profits
         • Increased unemployment ~60,000
           • No regional difference indicators