Econs - 3.8

Question 1

market structure - definition

Answer 1

refers to the key characteristics of a particular market

Question 2

3 features of a market - market structure

Answer 2

1. no & size of firms in the market
2. degree of intensity of price & non-price : competing in market
3. nature of barriers : how easy it is for firms to join

Question 3

4 factors impacted by large number of firms

Answer 3

1. price = lower prices
2. quality = improved
3. choice = more variety
4. profit = may be lower

Question 4

monopoly - definition

Answer 4

market structure where there is only supplier, with the power to affect market supply

Question 5

monopoly - advantages

Answer 5

• benefit from economies of scale
• can eliminate wasteful competition
• have financial resources to invest in innovation

Question 6

monopoly - disadvantages

Answer 6

• can be inefficient in resource allocation (too focused on profit maximisation)
• no substitutes
• high barriers
• less incentive to innovate