Perfect Competition, Imperfectly Competitive Markets, and Monopoly (AQA A-Level Economics): Flashcards
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Practise the cards
10 cards from this deck
Market structure
Market structure
Organisational characteristics defining how a market functions
Firms in perfect competition are described as
Firms in perfect competition are described as
Price-takers (must accept market price)
Monopoly market share
Monopoly market share
Single firm produces 100% of market output
Key characteristic of oligopoly firms
Key characteristic of oligopoly firms
Interdependence - actions of one firm affect rivals
Entry barrier definition
Entry barrier definition
Cost new firms face that incumbents don't
Natural barrier: economies of scale advantage
Natural barrier: economies of scale advantage
Large firms produce at lower long-run average cost
Sunk costs
Sunk costs
Costs already incurred that cannot be recovered
Limit pricing
Limit pricing
Reducing prices to normal profit to deter new entrants
Predatory pricing
Predatory pricing
Setting prices below costs to force competitors out
Two types of product differentiation
Two types of product differentiation
Real (actual differences) & perceived (branding/marketing)