Perfect Competition, Imperfectly Competitive Markets and Mon

• What is anti-competitive behaviour?

  Strategies to limit market contestability
• What defines an artificial barrier to entry?

  Man-made barriers to market entry
• What does break even mean in business terms?

  It is the same as normal profit
• What is a cartel?

  Groups colluding to avoid competition
• What is collective bargaining?

  Union members negotiating as a unit
• What is collusion in a business context?

  Illegal cooperation between firms
• What characterizes a concentrated market?

  Very few firms dominate the market
• What is a concentration ratio?

  Total market share of leading firms
• What is consumer surplus?

  Difference between willing and actual prices
• What does contestability refer to?

  Ease of market entry for competitors
• What is deadweight loss?

  Loss of social welfare from economic activity
• What is a demerger?

  Sale of parts to create smaller firms
• What does divorce of ownership and control mean?

  Owners separated from business managers
• What is a duopoly?

  Market dominated by two organizations
• Duopsony : two major buyers of a good or service
• What is dynamic efficiency?

  Improvements to efficiency in the long run
• How is dynamic efficiency achieved?

  Through investment into research and development
• What is an entry barrier?

  It makes market entry difficult for firms
• What is an exit barrier?

  It makes market exit difficult for firms
• What does game theory involve?

  Interacting decision makers with differing outcomes
• What is a hit and run strategy?

  Firms enter, profit, then leave the market
• What characterizes imperfect competition?

  Market structure between perfect competition and monopoly
• What is innovation?

  Improving upon an existing product or process
• What does interdependence mean in a market?

  Actions of one firm influence others' actions
• What is invention?

  Creation of a new product or process
• What does the kinked demand curve assume?

  Dual demand curve based on oligopoly structure
• What is limit pricing?

  Lowering price to average cost to deter entry
• What is market share maximization?

  Maximizing percentage share of the market
• What is market structure?

  Characteristics of a market
• What is a merger?

  Multiple firms unite to form one larger firm
• What defines a monopoly?

  Market with only one supplier
• What is monopoly power?

  Ability to set prices as a price maker
• What is a monopsony?

  Market with only one consumer
• What is a natural barrier to entry?

  Barriers to entry that are not man-made
• What is a natural monopoly?

  Ideal number of firms in an industry is one
• What is an oligopoly?

  Market dominated by a few firms
• What is a patent?

  Government protection for sole production rights
• What is predatory pricing?

  Lowering price below average cost temporarily
• What is price competition?

  Reducing price to attract customers from competitors
• What is price discrimination?

  Charging different prices to different consumer groups