What type of product/level of differentiation is there in each type of business?
Pure Monopoly-All the same/ a small amount of difference, Oligopoly- Very different, Monopolistic competition- A bit of difference & Perfect competition-All the same (Homogeeous).
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Can each type of business set their own price ?
Pure Monopoly- Complete control, Oligopoly- Some but interdependence, Monopolistic competition- Some control & Perfect competition-No.
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How does each business type compete?
Pure Monopoly- Keeping other firms out, Oligopoly- Non price factors, Monopolistic competition- Differentiating their products & Perfect competition- Price.
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What do firms aim to achieve?
Maximum profit, survival, growth and increased market share.
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Which firms want to maximise their profit?
Monopoly and Oligopolies
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Which firms want to maximise their sales?
Often Oligopolies or who's profits are someway restricted or controlled.
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Which type of firm aims to grow?
Usually Oligopolies
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Which type of firm aims to survive?
Usually small firms in perfect competition.
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Which type of firm aims to maximise their market share?
Often Oligopoly or Monopolistic markets.
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How can markets be split?
Geographically, Ethically,By income and by product type.
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Competitive markets
Is one in which firms strive to outdo their rivals but does not necessarily meet all the conditions of a perfect market.
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What is needed for perfect competition?
Large number of buyers and sellers, each buyer & seller have perfect information about the market, each customer can buy as much as they would like, only one homogenous good in the market and there are no barriers to entry& there is perfect knowledge
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What are the assumptions in a Monopoly market?
There is only 1 firm, the size of the firm is large, there are high barriers to entry & they have total control to set their own price.
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Pure Monopoly
There is only one firm in the market.
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Monopoly Power
The power of a firm to act as a price maker in it's market. Producer Sovereignty.
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Consumer Sovereignty
A key feature of all types of competitive markets is consumer sovereignty. This means that via exercising their spending power, consumers collectively determine what is produced the market.
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What are the issues with consumer sovereignty
Some people have 'more votes'. Some things may be more or less deserving.
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Price Makers
A firm possessing the power to set price within the market
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Producer Sovereignty
Producers/firms in a market determine what is produced and what prices are charged.
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How much market share must a dominant firm have?
25% +
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Quantity Setters
A firm choosing the qty of goods to sell rather than price.
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How can power be established?
Natural monopoly, Geographic- natural resources might only be available in 1/ few places or isolated locations, Government- create monopolies such as patents or regulations.
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What techniques are used in non-price competition?
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