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.
Define perfect competition
Is a market structure that involves strong competition and is saturated by businesses selling similar products.
-Many buyers and sellers
Market structure that is operated by one firm. They are the price makers where competition is weak.
What is an example of a monoploy?
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.