Booklet 1: Spectrum Of Competition/ Market Structures Flashcards
(12 cards)
What is competition?
The rivalry that exists between businesses in a market as they seek to gain a share of the market and influence customers to buy their product/service.
How does competition influence a Business Organisation?
Keeps the price low to allow you to compete.
Encourages innovation and puts emphasis on customer needs.
Have to be more creative/have a USP to differentiate their products.
What is Market share?
Proportion of sales in a market that is held by a particular brand, product or company.
What is Market growth?
The increase in market size for a product/service over time.
What is Market size?
The quantity or value of units sold to a particular market in a given period of time.
How to calculate Market share?
(Total sales revenue of firm / Total value of sales in the defined market) × 100
What are the 4 market structures?
- Perfect Competition
- Competitive Market
- Oligopoly
- Monopoly
What is perfect competition?
A market structure in which there are a large number of businesses, each with a relatively small market share. They sell identical products and services to meet the needs of a large number of customers.
What is Competitive Market?
A relatively large number of small firms which produce similar products.
What is Oligopoly?
An oligopoly exists where a market is dominated by a few large suppliers, each with a large market share. There are protected barriers to entry.
What is Monopoly?
Monopoly means a market where there is only one seller of a particular good or service.
What are the factors that determine the degree of Competition?
Factors include:
- Barriers to entry
- Product differentiation
- Number of sellers
- Imperfect knowledge
- Number of buyers
