Market Analysis (Market Structures: Perfect Competition, Monopoly, Oligolopy And Duolopy) LW4 an der Fontys University Of Applied Sciences | Karteikarten & Zusammenfassungen

Lernmaterialien für Market analysis (Market structures: perfect competition, monopoly, oligolopy and duolopy) LW4 an der Fontys University of Applied Sciences

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TESTE DEIN WISSEN
What are factors of price elasticity of supply?
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TESTE DEIN WISSEN
-Supplier has plenty of spare capacity to increase output
-High stock levels are available to meet rising demand
-Short production time frame to get product to market
-Ease of factor substitution is high- i.e. resources can be reallocated easily
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TESTE DEIN WISSEN
What are factors of elasticity of demand?
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TESTE DEIN WISSEN
-Availability of substitutes 
-Cost of switching suppliers
-Breadth of definition
-Degree of necessity
-Time frame when making a choice
-Brand loyalty 
-Percentage of income spent
-Habitual demand
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TESTE DEIN WISSEN
What are aspects of a competitive market?
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TESTE DEIN WISSEN
A competitive market is where more than one sellers offers the same or a similar product.
-The more sellers, the greater the competition 
-The closer the substitutes, the greater the competition

Firms try to differentiate their products by: 
-Building better relationships with customers
-Encouraging purchasing habits
Providing high level customer and aftersales service
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TESTE DEIN WISSEN
What are aspects of perfect competition?
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TESTE DEIN WISSEN
Competitive firms:
-are price takers
-the market supply is closely linked to firms' costs

The implications of these conditions are: 
A single market price is determined by the international of demand and supply

Perfect competition:

-Homogenous product
-Free entry and Exit
-Perfect knowledge of prices and technology 
-No transportation cost
-No artificial restrictions
-Large buyers and sellers 
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TESTE DEIN WISSEN
What is the total revenue in a perfectly competitive market ?
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TESTE DEIN WISSEN
The product of price and quantity 
(TR = P * Q)
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TESTE DEIN WISSEN
What is a shutdown?
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TESTE DEIN WISSEN
A short run decision not to produce anything during a specific period of time because of current market conditions. The short run is a period of time over which some factors of production are fixed.
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TESTE DEIN WISSEN
What must be noted to maximize short-run profits?
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TESTE DEIN WISSEN
-Fixed inputs (and fixed costs) can not be changed in the short-run and they are sunk
-They can only change variable costs and determine how much output to produce by changing the variable inputs.

-> shutdown  if P < AVC
(profit<average varied cost) (?)
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TESTE DEIN WISSEN
What is the difference to exiting a market?
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TESTE DEIN WISSEN
Exit is a long run decision to leave the market. The short run and long run differ because:
-A firm that shuts down temporarily still must pay its fixed costs, whereas a firm that exists the market saves both its fixed and variable costs.
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TESTE DEIN WISSEN
When should a firm exit a market?
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TESTE DEIN WISSEN
A firm exists in the market if the revenue it would get from producing is less than its total cost.
-Exit if TR < TC (Total revenue < Total cost) or P < ATC (Price < Average total cost)
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TESTE DEIN WISSEN
What is imperfect competition?
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TESTE DEIN WISSEN
When firms have some degree of market power.
Imperfect competition makes firms more able to determine prices as the assumptions of perfect competition are relaxed.
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TESTE DEIN WISSEN
What is a monopoly?
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TESTE DEIN WISSEN
Its at the extreme of imperfect competition. 
-A monopoly is where a firm is the sole seller of a product without close substitutes.
-A monopoly is a price maker -> only because its the only seller in the market. But it still needs to reduce the price if it wants to sell more units.
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TESTE DEIN WISSEN
What are the different types of monopolies?
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TESTE DEIN WISSEN
Natural monopoly: 
When the costs of production are lowest if only one firm provides output.
Example: Water companies

Geographic monopoly: When there are no other producers or sellers within a given region.
Example: Buffalo Sabres

Government monopoly: When the government either owns and runs the business or authorizes only one producer.
Example: the post office

Technological monopoly: When a firm controls a manufacturing method, invention or a type of technology
Example: Apple Patents
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Q:
What are factors of price elasticity of supply?
A:
-Supplier has plenty of spare capacity to increase output
-High stock levels are available to meet rising demand
-Short production time frame to get product to market
-Ease of factor substitution is high- i.e. resources can be reallocated easily
Q:
What are factors of elasticity of demand?
A:
-Availability of substitutes 
-Cost of switching suppliers
-Breadth of definition
-Degree of necessity
-Time frame when making a choice
-Brand loyalty 
-Percentage of income spent
-Habitual demand
Q:
What are aspects of a competitive market?
A:
A competitive market is where more than one sellers offers the same or a similar product.
-The more sellers, the greater the competition 
-The closer the substitutes, the greater the competition

Firms try to differentiate their products by: 
-Building better relationships with customers
-Encouraging purchasing habits
Providing high level customer and aftersales service
Q:
What are aspects of perfect competition?
A:
Competitive firms:
-are price takers
-the market supply is closely linked to firms' costs

The implications of these conditions are: 
A single market price is determined by the international of demand and supply

Perfect competition:

-Homogenous product
-Free entry and Exit
-Perfect knowledge of prices and technology 
-No transportation cost
-No artificial restrictions
-Large buyers and sellers 
Q:
What is the total revenue in a perfectly competitive market ?
A:
The product of price and quantity 
(TR = P * Q)
Mehr Karteikarten anzeigen
Q:
What is a shutdown?
A:
A short run decision not to produce anything during a specific period of time because of current market conditions. The short run is a period of time over which some factors of production are fixed.
Q:
What must be noted to maximize short-run profits?
A:
-Fixed inputs (and fixed costs) can not be changed in the short-run and they are sunk
-They can only change variable costs and determine how much output to produce by changing the variable inputs.

-> shutdown  if P < AVC
(profit<average varied cost) (?)
Q:
What is the difference to exiting a market?
A:
Exit is a long run decision to leave the market. The short run and long run differ because:
-A firm that shuts down temporarily still must pay its fixed costs, whereas a firm that exists the market saves both its fixed and variable costs.
Q:
When should a firm exit a market?
A:
A firm exists in the market if the revenue it would get from producing is less than its total cost.
-Exit if TR < TC (Total revenue < Total cost) or P < ATC (Price < Average total cost)
Q:
What is imperfect competition?
A:
When firms have some degree of market power.
Imperfect competition makes firms more able to determine prices as the assumptions of perfect competition are relaxed.
Q:
What is a monopoly?
A:
Its at the extreme of imperfect competition. 
-A monopoly is where a firm is the sole seller of a product without close substitutes.
-A monopoly is a price maker -> only because its the only seller in the market. But it still needs to reduce the price if it wants to sell more units.
Q:
What are the different types of monopolies?
A:
Natural monopoly: 
When the costs of production are lowest if only one firm provides output.
Example: Water companies

Geographic monopoly: When there are no other producers or sellers within a given region.
Example: Buffalo Sabres

Government monopoly: When the government either owns and runs the business or authorizes only one producer.
Example: the post office

Technological monopoly: When a firm controls a manufacturing method, invention or a type of technology
Example: Apple Patents
Market analysis (Market structures: perfect competition, monopoly, oligolopy and duolopy) LW4

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