Business component 1

• What is a characteristic of perfect competition?

  Large number of businesses with no market leaders
• What type of goods are found in perfect competition?

  Homogenous goods with no product differentiation
• Why is equal access to technology important in perfect competition?

  It ensures no single business has an advantage over others
• What does free entry and exit from the market mean in perfect competition?

  Businesses can enter or leave the market without restrictions
• Why is perfect competition considered rare in the real world?

  Due to the presence of branding and differentiation
• How does perfect competition serve as a model for analyzing other market structures?

  It provides a baseline for comparison with other structures
• What is a characteristic of a monopoly?

  Single producer dominates the market
• What do barriers to entry in a monopoly do?

  They prevent other businesses from entering the market
• How does a monopoly influence price?

  It has significant influence on price
• How have pure monopolies changed over time?

  They have diminished due to deregulation and privatization
• What do competition authorities monitor in relation to monopolies?

  Businesses with over 25% market share
• What is one advantage of monopolies to consumers?

  Economies of scale lead to lower prices
• How can profits from monopolies benefit consumers?

  They can be invested in innovation and product development
• What is a characteristic of an oligopoly?

  Few dominant businesses with differentiated products
• How do businesses in an oligopoly create brand loyalty?

  Through heavy advertising
• What is a common pricing behavior in oligopolies?

  Stable prices with occasional price wars
• What are barriers to entry in an oligopoly?

  High start-up costs
• What is collusion in the context of oligopolies?

  Businesses may collude to control prices, which is illegal
• What are the advantages of oligopolies to consumers?

  Economies of scale, innovation, and variety in products and services
• What is a characteristic of monopolistic competition?

  Large number of small businesses with similar but differentiated products
• What is the barrier to entry in monopolistic competition?

  Few barriers to entry
• How much control do businesses have over prices in monopolistic competition?

  Limited control over prices
• What are examples of businesses in monopolistic competition?


  Local businesses like hairdressers or take-away restaurants
• How do businesses differentiate themselves in monopolistic competition?


  Through product features, distribution methods, and promotions