GENERAL

• What is meant by market concentration?


  The degree to which businesses dominate an industry, measured using concentration ratios (market shares).
• What is meant by perfect competition?


  Large number of small suppliers, none that dominate the market.
• What is meant by pure monopoly?


  One sole supplier in the market.
• What is meant by monopsony?


  A market situation in which there is only one buyer.
• What is meant by barriers to entry?


  Are designed to block potential entrants from entering a market profitably.
• What is meant by monopolistic competition?


  Firms have many competitors but each one sell a product which is differentiated.
• What is meant by sunk costs?


  Those which are unrecoverable. E.g. advertising
• What is meant by limit pricing?


  A limit price (or limit pricing) is a price, or pricing strategy, where products are sold by a supplier at a price low enough to make it unprofitable for other players to enter the market.
• What is meant by a natural cost advantage?


  May include access to natural resources, such as high grade areas or a low-cost power source, highly skilled labour, geographic location.
• What is meant by legal barriers?


  Such as licensing or permits.
• What is meant by anti-competitive practices?


  Firms who lack suppliers into exclusive contracts etc at the determent to competition in the market.
• What is meant by market structure?


  At it’s simplest, it is a description of the characteristics that buyers encounter and sellers face in a given industry.
• What are the types of market structure?


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• What is meant by perfect competition?


  A theoretical market structure in which there are no monopolies.
• What is meant by monopolistic competition?


  When many companies offer competing products or services that are similar, but not perfect substitutes.
• What is meant by predatory pricing?


  Setting prices so low to drive competition out of the market.