Flashcards
Part 1.3: Perfect competition, imperfectly competitive markets and monopoly
Flashcards do conjunto (31)
- 1Market structureThe organisational and other characteristics of a market.
- 2Entry barriersObstacles that make it difficult for a new firm to enter a market.
- 3Exit barriersObstacles that make it difficult for an established firm to leave a market.
- 4Natural barriersBarriers that result from inherent features of the industry, such as economies of scale or high research and development costs.
- 5Sunk costsCosts that have been incurred and cannot be recovered.
- 6Artificial barriersBarriers erected by the firms themselves, such as high levels of advertising expenditure or predatory pricing.
- 7Limit pricesPrices set low enough to make it unprofitable for other firms to enter the market.
- 8Predatory pricesPrices set below average cost with the aim of forcing rival firms out of business.
- 9Product differentiationThe marketing of generally similar products with minor variations or the marketing of a range of different products.
- 10Divorce of ownership from controlThe owners and those who manage the firm are different groups with different objectives.
- 11SatisficingAchieving a satisfactory outcome rather than the best possible outcome.
- 12MonopolyOne firm only in a market.
- 13Static efficiencyEfficiency at a particular point in time.
- 14Dynamic efficiencyOccurs in the long run, leading to the development of new products and more efficient processes that improved productive and allocative efficiency.
- 15Productive efficiencyThe level of output at which average costs of production are minimised.
- 16Allocative efficiencyOccurs when it is impossible to improve overall economic welfare by reallocating resources between markets. P = MC.
- 17Private costs and benefitsPrivate costs are costs incurred solely by an individual or firm as a result of their own activities; private benefits are benefits enjoyed solely by an individual or firm as a result of their own activities.
- 18Social costs and benefitsSocial costs are costs which fall on the whole of society: social benefits are benefits enjoyed by the whole of society.
- 19Monopoly powerFirms in market structures other than pure monopoly usually possess significant monopoly power; power over price setting and other aspects of the market such as product differentiation.
- 20Concentration ratioMeasures the market share of the biggest firms in the market.
- 21Market conductThe price and other market policies pursued by firms.
- 22CartelA collusive agreement by firms, usually to fix prices or restrict output.
- 23Price leadershipThe setting of prices in a market, usually by a dominant firm, which is then followed by other firms in the same market. One firm acts as a barometer for others to follow.
- 24Price agreementAn agreement between a firm, similar firms, suppliers or customers regarding the pricing of a good or service.
- 25Price warOccurs when rival firms continuously lower prices to undercut each other.
- 26Price discriminationCharging different prices to different customers for the same product or service, with the prices based on different willingness to pay.
- 27Consumer surplusA measure of the economic welfare enjoyed by consumers; surplus utility received over and above the price paid for a good.
- 28Producer surplusA measure of the economic welfare enjoyed by firms or producers; the difference between the price a firm succeeds in charging and the minimum price it would be prepared to accept.
- 29Contestable marketA market in which the potential exists for new firms to enter the market. A perfectly contestable market has no entry or exit barriers and no sunk costs, and both incumbent firms and new entrants have access to the same level of technology.
- 30Hit-and-run competitionOccurs when a new entrant can hit the market, make supernormal profit and then run, given that there are no or low barriers to exit.
- 31Deadweight lossThe name given to the loss of economic welfare when the maximum attainable level of total welfare is not achieved.
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- A2 Economics FlashCards sobre Part 1.3: Perfect competition, imperfectly competitive markets and monopoly, criado por Alex Maas em 01-03-2017.
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- Alex Maas
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