Micro 8.8 0.0 / 5 ? EconomicsMarket ImperfectionsA2/A-levelAQA Created by: neve.whinnCreated on: 18-03-20 11:53 What are 5 features of perfect markets? Perfect information, no barriers, homogenous products & FOP, large number of buyers and sellers, perfect mobility of FOP. 1 of 12 What is imperfect information? When economic agents do not know everything they need to know in order to make a fully informed decision. 2 of 12 What is asymmetric information? A source of information failure where one economic agent knows more than the other, giving them more power in a market transaction. 3 of 12 What may producers do with asymmetric information? Exploit consumers. 4 of 12 How can government intervention help asymmetric information? To improve the quality and reliability of information held by economic agents, and to redress the imbalance 5 of 12 What is a monopoly? An extreme example of a market structure that, in its pure form, means that only firm supplies a market. 6 of 12 Why does a monopoly producer have no incentive to act economically efficient in a free market without government intervention? Since there are no rival firms to take its market share. 7 of 12 Why are there no rivals firms in a monopoly? Because of significant barriers to entry to the market, such as product differentiation and large economies of scale. 8 of 12 How can monopolies be disadvantageous for consumers? They will not benefit from the lowest prices, or have a choice of products. 9 of 12 What does market failure lead to? Productive and allocative inefficiency and possibly reduced choice for consumers, which is an equity issue. 10 of 12 What is occupational immobility? When individuals find it difficult to move between occupations due to the lack of specific skills and qualifications required. 11 of 12 What is geographical immobility? When individuals find it difficult to move between occupations due to not being able to afford accomodation or dependent relatives. 12 of 12
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