the organisational and other characteristics of a market
market structure
1 of 32
obstacles that make it difficult for a new firm to enter a market
entry barriers
2 of 32
obstacles that make it difficult for an established firm to leave a market
exit barriers
3 of 32
barriers that result from inherent features of the industry, such as economies of scale or high research and development costs
natural barriers
4 of 32
costs that have already been incurred and cannot be recovered
sunk costs
5 of 32
barriers erected by the firms themselves such as high levels of advertising expenditure or predatory pricing
artificial barriers
6 of 32
when firms set prices low enough to make it unprofitable for new firms to enter the market
limit pricing
7 of 32
when firms set prices below average costs with the aim of forcing rival firms out of business
predatory pricing
8 of 32
the marketing of generally similar products with minor variations or the marketing of a range of different products
product differentiation
9 of 32
the owners and those who manage the firm are different groups with different objectives
divorce of ownership from control
10 of 32
achieving a satisfactory outcome rather than the best possible outcome
satisficing
11 of 32
one firm only in a market
monopoly
12 of 32
efficiency at a particular point in time
static efficiency
13 of 32
occurs in the long run, leading to the development of new products and more efficient processes that improve productive efficiency
dynamic efficiency
14 of 32
the level of output at which average costs of production are minimised
productive efficiency
15 of 32
occurs when it is impossible to improve overall economic welfare by reallocating resources between markets (in an economy P=MC must occur in every market)
allocative efficiency
16 of 32
costs or benefits incurred solely by a firm or individual as a result of their own activities
private costs and benefits
17 of 32
costs or benefits that fall on the whole of society including the private and external cost/benefit
social costs and benefits
18 of 32
firms in market structures other than pure monopoly usually possess significant monopoly power, over price settings and other aspects of the market such as product differentiation
monopoly power
19 of 32
measures the market share of the biggest firms in the market
concentration ratio
20 of 32
the price and other market policies pursued by firms, also known as market behaviour
market conduct
21 of 32
a collusive agreement by firms, usually to fix prices or restrict ouput
cartel
22 of 32
the setting of prices in a market, usually by a dominant firm, which is then followed by other firms in the same market
price leadership
23 of 32
an agreement between a firm, similar firms, suppliers or customers regarding the pricing of a good or service
price agreement
24 of 32
occurs when rival firms continuously lower prices to undercut each other
price war
25 of 32
charging different prices to different customers for the same product or service, with the prices based on different willingness to pay
price discrimination
26 of 32
a measure of the economic welfare enjoyed by consumers, surplus utility received over and above the price of a good
consumer surplus
27 of 32
a measure of the economic welfare enjoyed by firms or producers, the difference between the price a firm succeeds in charging and the minimum price it would be prepared to accept
producer surplus
28 of 32
a market in which the potential exists for new firms to enter the market
contestable market
29 of 32
a market with no entry or exit barriers, no sunk costs and both incumbent firms and new entrants may have access to the same level technology
perfectly contestable market
30 of 32
occurs when a new entrant an join the market, earn profit, then leave given that there are no barriers to exit
hit-and-run competition
31 of 32
the name given to the loss of economic welfare when the maximum attainable level of total welfare is not achieved
deadweight loss
32 of 32
Other cards in this set
Card 2
Front
obstacles that make it difficult for a new firm to enter a market
Back
entry barriers
Card 3
Front
obstacles that make it difficult for an established firm to leave a market
Back
Card 4
Front
barriers that result from inherent features of the industry, such as economies of scale or high research and development costs
Back
Card 5
Front
costs that have already been incurred and cannot be recovered
Comments
No comments have yet been made