Chapter 46 Flashcards
What are barriers to entry?
Factors which make it difficult or impossible for firms to enter and industry and compete with existing producers.
What are barriers to exit?
Factors which make it difficult for firms to cease production and leave an industry.
What is a brand?
A name, design, symbol or other feature which makes a product different from others and therefore makes it non-homogenous.
What is the concentration ratio?
The market share of the largest firms in an industry.
What are homogenous goods?
Goods which are made by different firms, which are identical.
What is imperfect competition?
Imperfect competition is a market structure where there are several or a relatively large number of firms in the industry, each of which has the ability to control the price that it sets for its products.
In market theory, what is independence?
When the actions of one firm will have no significant impact on any other single firm in the industry.
In market theory, what is interdependence?
When the actions of one firm, will have impact on other firms in the industry.
What is limit pricing?
When a firm chooses, rather than to profit maximise in the short run, sets a low enough price to deter new entrants from coming into its market.
What is market concentration?
The degree to which the output of an industry is dominated by its largest producers.
What is market share?
Market share is the proportion of sales in a market taken by a firm of group of firms.
What are market structures?
The characteristics of a market which determine the behaviour of firms within the market.
What is a natural monopoly?
This is where economies of scale are so large relative to market demand that the dominant producer in the industry will always enjoy lower costs of production than any other potential competitor.
What are non-homogenous goods?
Goods which are similar but not identical, made by different firms, such as branded goods.
What is perfect knowledge of information?
This exists if all buyers in a market are fully informed of prices and quantities for sale, while producers have equal access to information about production techniques.
