Market Structure (Edexcel A-Level Economics A): Flashcards

Market with product differentiation, many firms & free entry

Gives firms downward-sloping demand curves & pricing power

No barriers; new firms enter if supernormal profits exist

$MR = MC$

Normal profit only; AC tangent to demand curve

Not achieved; firms don't produce at minimum AC

Not achieved; price above marginal cost ($P > MC$)

Degree market dominated by small number of firms

Combined market share of three largest firms

Key oligopoly feature; firms must consider rivals' reactions