Economics and Business - Topic 2 Key terms

Abnormal profit: Any level of profit over and above normal profits.

Allocative efficiency: Is achieved when resources are used to yield the maxiumn benefit to everyone. Goods/services produced will be the ones mostly closely suited to consumers' needs  and preferences.

Barrier to entry: Are factoes that make it difficult for a firm to enter a market. There will be less competition, high start up cost that requires a lot of investments, strong brand loyalty. 

Brand proliferation: Occurs when one producer sells multiple brands, to reach different market segments or as a competitive stratgey.

Collusion: Occurs when business agrees with one another in order to advoid having to compete. 

Concentration ratio: Measures the extent to which a market/indeustry is dominated by a few leading firms

Duopoly: Occurs when 2 large firm dominate the market (i.e. Visa and Mastercard)

Game theory: Studies the behavious of players which are intredependent; the actions of one will have impact on others. 

Homogenous product: Are identical to one another.

Imperfect competition: Covers any market situations between the extrmrs of perfect competition and monoply.

Legal monopoly: Within the UK legal systems 25% or more of the market is seen as monopoly power of a firm.

Limit pricing: Setting prices below a profit maximising level in order not to attract competitors to enter a contestable market.

Long tail: The idea…