Monopoly Perfect Competition

More revision notes on monopolies and perfectly competitive markets for AQA A-Level Economics Paper 5.

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James
MARKET STRUCTURE
MONOPOLY AND PERFECT COMPETITION
THE MARKET STRUCTURE SPECTRUM
PERFECT COMPETITION
An increase in the supply by ONE firm would result in a small
rightward movement along the demand curve, and
therefore demand will not change.
If output was doubled, the price would fall. If one perfectly
competitive firm raises their prices, then there are many
other substitutes available to consumers. Likewise, it would
be pointless to sell for below the market price ­ they would
lose potential profit.
The demand curve is horizontal ­ perfectly elastic.
THE GROWTH OF FIRMS
A concentration ratio is a method of measuring
the potential power of the largest and most
important companies in a particular market.
They look at a firm's market share in the industry,
and how many workers are employed.
A three-firm concentration ratio would be the total
share of the market (output, employment etc).
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James
MERGER TAKEOVER
H When two companies competing in the When a firm takes over another firm in the
O same market join together. same industry.
RI
Z
E.g. Ford and Volvo. E.g. Fullers takeover Gales.
O
NT
AL
VE When two firms, each working at When one firm takeover another firm,
RT different stages in the production of operating in another stage of the
IC
AL the same good, combine. production process.
E.g. Time Warner and Turner E.g. Wolverhampton & Dudley brewery takes
Corporation.…read more

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Natural Monopoly: When extensive economies of scale already exist. E.g. SWT ­ Rail
network already exists.…read more

Comments

davidsalter

This is a well presented 2 page summary about the characteristics of perfect competition and monopoly and how firms grow. Lots of bullet points and boxes so easy to read.

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