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AREA OF STUDY 1 ECONOMICS > Market structure > Flashcards

Flashcards in Market structure Deck (13):

Define market structure

The type and level of competition within a market as well as the market power and control a firm has within it.
Eg- Monopoly


Define perfect competition

Is a market structure that involves strong competition and is saturated by businesses selling similar products.
-Many buyers and sellers
-Homogenous products


Define monoploy

Market structure that is operated by one firm. They are the price makers where competition is weak.


What is an example of a monoploy?

Australia Post


Define oliogpoly

Market structure where a few firms control the output of a product. Fairly difficult entry and exit as advertising and branding can act as barriers.


What are the problems associated with weak competition?

-Higher prices as competition is lower
-Less rivalry and pressure to cut costs resulting in inefficiency.


What is the impact of strong competition on efficiency?

-Businesses must remain competitive as they will fail. They can do this by reducing production costs to lower selling prices.
-Cheaper products for consumers
-Output of g+s and average incomes become stronger.


How can the gov promote higher levels of competition and efficiency?

-Deregulating key markets (telecommunications)
-Reduce barriers of entry


Define technical efficiency

Using the least costs involved in production. Producing as much possible with as few resources as possible.


How do u know when technical efficiency is maximized?

When you cant produce more without using more resources.


Define dynamic efficiency

How quickly a business can adapt to the changing needs of society. Resources are allocated quickly to increase choice and meet consumer needs.


Define allocative efficiency

Resources are allocated in a way that meets the needs and wants of society. If resources arnt allocated effectively they will go to waste.


Define inter-temporal efficiency

Finding the right balance between allocating resources for the current needs and for the future needs.
Important as businesses cannot run out of resources.