Competition and Markets

Question 1

Define competition

Answer 1

Rivalry between sellers

Question 2

Define market

Answer 2

Where buyers and sellers meet, can be physical or non-physical

Question 3

Define non-physical

Answer 3

Online or digitally

Question 4

Why do physical markets still survive?

Answer 4

People like the personalisation of physical markets

Question 5

Why do people like non-physical markets?

Answer 5

It is convenient

Question 6

Define market price

Answer 6

A price range which consumers are willing to pay

Question 7

Define what is meant by a competitive market?

Answer 7

A market which there are a higher number of sellers, competition is based on price

Question 8

Define a monopoly market

Answer 8

A market dominated by one seller

Question 9

Define economies of scale

Answer 9

Arise when unit costs fall as output rises

Question 10

How do you work out unit costs?

Answer 10

Total production costs/ total output

Question 11

State three characteristics of a monopoly market

Answer 11

High prices, dominated by one seller, limited choice/ no choice, high barriers to entry

Question 12

Define what is meant by oligopoly

Answer 12

A market is dominated by a few firms

Question 13

State three characteristics of an oligopoly

Answer 13

Not very competitive, a diluted version of monopoly, high barriers to entry, similar sellers, high prices, compete on non price differences

Question 14

Define collusion

Answer 14

When rival firms cooperate for their mutual benefit

Question 15

Define market size

Answer 15

Collective value of goods/ services that buyers purchase in a particular market

Question 16

Define market growth

Answer 16

The percentage change in the size of a market

Question 17

Define market size

Answer 17

The percentage of total sales a business has in a specified market

Question 18

State three characteristics of a competitive market

Answer 18

Many sellers, competition on price, low barriers to entry

Question 19

Define monopolistic competition

Answer 19

A market with many sellers who sell slightly differentiated products

Question 20

State three characteristics of monopolistic competition

Answer 20

Non price differences, many sellers, similar products

Question 21

Define barriers to entry/ exit

Answer 21

The factors which prevent a business from entering/ exiting a market

Question 22

Why may a firm want to enter a market ?

Answer 22

To make profit, to differentiate from other products in the market, they found a gap in the market

Question 23

Define market dominance

Answer 23

A measure of a market share compared to competitors

Question 24

Define market power

Answer 24

The ability of a firm to influence or control the terms or conditions on which goods are sold and brought

Question 25

Define an acquisition

Answer 25

When the control of a company is achieved by buying 51% of their shares

Question 26

Define a merger

Answer 26

When two companies come together to form one

Question 27

What are the benefits of acquisitions and mergers

Answer 27

Economies of scale, new management skills, increased market share, can meet customer needs more effectively

Question 28

What is meant by organic growth?

Answer 28

Expansion from within

Question 29

Give examples of organic growth

Answer 29

Opening new stores, launching new products, employing more staff, increasing productive capacity, investing in new technology , improving existing products

Question 30

What do the CMA do?

Answer 30

Investigate mergers & abuses of power & cartel offences and enforces legislation

Question 31

define dynamic

Answer 31

(of a process or system) characterized by constant change, activity, or progress.