Market Structures Definitions

allocative efficiency, productive efficiency, monopolies, monopolistic competition, oligopolies 

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  • Created by: TessAni
  • Created on: 18-01-13 15:49
Allocative Efficiency
Where price is equal to marginal cost
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Productive efficiency
Using the least possible amount of scarce resources to produce the maximum output
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Dynamic Efficiency
Where unit costs are lowered over time
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Monopoly
A single firm in a market
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Natural Monopoly
Where a monopolist has overwhelming cost advantage
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Monopolistic Competition
A market structure with many firms producing a differentiated product and where there are few barriers to entry and exit
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Oligopoly
A market dominated by a few firms
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Contestable Market
A set of conditions where there is always the threat of new firms being able to enter. Remember, this is usually monopolistic markets, however, you can have potential entrance of competition in monopoly markets
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Price Discrimination
Where a monopolist charges different prices for the same product in different markets
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Product Differentiation
Where there are minor variations in the types of products on offer
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Deadweight loss
Loss to society of the firm producing where price exceeds marginal cost
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Excess capacity
A consequence of firms producing at above the minimum point on the average cost curve
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Non-price Competition
Competition between firms on the basis of, for example, branding, customer service, location, range of products, advertising
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Interdepdent
Where the actions of one firm provoke counter-action by others - Oligopolies
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Kinked demand
Indicative of price rigidity in oligopoly
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Collusion
Where firms tacitly or otherwise agree to not compete on prices, service provision and other matters that might adversely affect mutual well-being
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Card 2

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Using the least possible amount of scarce resources to produce the maximum output

Back

Productive efficiency

Card 3

Front

Where unit costs are lowered over time

Back

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Card 4

Front

A single firm in a market

Back

Preview of the back of card 4

Card 5

Front

Where a monopolist has overwhelming cost advantage

Back

Preview of the back of card 5
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