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Differentiate between price makers and price takers.
Price takers accept the market price; price makers can influence it.
What are the key differences between monopoly and oligopoly?
Monopoly: one firm. Oligopoly: few firms.
Compare and contrast perfect competition and monopolistic competition.
Perfect competition: homogeneous products, many firms, no barriers. Monopolistic competition: differentiated products, many firms, low barriers.
How does the number of firms differ between oligopoly and monopolistic competition?
Oligopoly: few firms. Monopolistic competition: many firms.
Differentiate between a firm's demand curve in perfect competition and a monopoly.
Perfect competition: perfectly elastic. Monopoly: downward sloping.
Compare the ease of entry in monopolistic competition and oligopoly.
Monopolistic competition: relatively easy entry. Oligopoly: difficult entry.
How do long-run profits differ between monopoly and monopolistic competition?
Monopoly: possible long-run profits. Monopolistic competition: zero economic profit in the long run.
Compare product differentiation in oligopoly and monopolistic competition.
Oligopoly: products can be differentiated or standardized. Monopolistic competition: products are differentiated.
What is the difference between strategic interdependence in oligopolies and monopolistic competition?
Oligopolies: firms are strategically interdependent. Monopolistic competition: firms act independently.
How do barriers to entry compare between monopoly and monopolistic competition?
Monopoly: very high barriers. Monopolistic competition: low barriers.
What is Imperfect Competition?
Markets where firms have some control over price.
What is a Monopoly?
One firm dominates the entire market.
What is an Oligopoly?
A market dominated by a few large firms.
What is Monopolistic Competition?
Many firms offer slightly differentiated products.
Define 'Price Maker'.
A firm that has the power to influence prices.
What are Barriers to Entry?
Obstacles that prevent new firms from entering a market.
Define 'Non-Price Competition'.
Firms competing using advertising and branding instead of just price.
What does 'Demand > Marginal Revenue (MR)' mean in imperfect competition?
To sell more, firms must lower the price, so MR decreases faster than demand.
What is 'Economies of Scale'?
Large firms can produce at lower costs per unit due to increased production.
Define 'Differentiated Products'.
Products that are not identical; they have unique features or branding.
How do patents create barriers to entry?
Patents give firms exclusive rights to produce a product, blocking new entrants.
How does brand reputation act as a barrier to entry?
A strong brand can make it tough for new firms to gain customer trust.
How do high fixed costs deter new firms?
High initial costs (like building a factory) can deter new firms from entering the market.
How does control of resources create a barrier to entry?
If a firm controls access to a key resource, it’s hard for others to compete.
Explain the inefficiency of imperfectly competitive firms in the long run.
They don't produce at the lowest possible cost, leading to inefficiency.
How does product differentiation impact market power?
Differentiated products allow firms to have some control over pricing, increasing market power.
How does advertising affect demand in monopolistic competition?
Advertising aims to increase demand and make it more inelastic.
How do long-run profits relate to barriers to entry?
Barriers to entry allow imperfectly competitive firms to earn long-run profits.
How does location advantage create a barrier to entry?
Being the only provider in an area can also act as a barrier.
How do economies of scale act as a barrier to entry?
Large firms can produce at lower costs, making it hard for new firms to compete.