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Description
Term
That which may promote efficiency as a firm may go out of business if not producing what consumer want at low cost, while a firm may increase profits if it is relatively more efficiency
Competition
Where prices in two market segments are equalised by participants purchasing and reselling products
Arbitrage
The fundamental feature of monopolistic competition
Product differentiation
The curve that is equal to a firm's average revenue curve
Demand curve
A measure of the market share of the largest 'n' firms in an industry
n-firm concentration ratio
That profit made in the long-run under perfect competition
Normal profit
Where a firm sets price below average variable cost in an attempt to force rivals out of the market
Predatory pricing
Where the firms in a market cannot control prices, with freedom of entry and exit
Perfect Competition
A model of oligopoly that a firm may face two different demand curves depending on how rivals respond to a change in price
Kinked demand curve model
That which is legal only where it improves production, distribution, and/or technical progress in goods and the market such as setting joint industry standards
Collusion
Description
Term
That which barriers to entry and exit can encourage by promoting research and development in firms wishing to enter a market and those incumbent firms looking to maintain supernormal profits
Efficiency
A situation of productive and allocative efficiency where it is not possible to make someone better-off without making another worse-off (depending on the value society places on the goods and services concerned)
Pareto efficiency
Those type of costs that can be a barrier to entry, examples of which are; advertising expenditure, uniforms, equipment, &c.
Sunk Costs
That market structure under which long-run equilibrium is reached where average cost equals average revenue, all profits being normal
Monopolistic competition
A situation in which firms refrain from competing on price though without formal agreement or communication
Tacit collusion
That, the three principal measures of which are; sales/market share, output, and employment
Market concentration
That which often arises between countries - such as OPEC - as it is near universally illegal for firms
Cartel
That the principal idea behind which is that the behaviour of firms is determined by potential competition as well as actual competition
Contestable Markets
A market with product differentiation, relatively elastic price, freedom of entry, and low concentration, such as in fast food restaurants
Monopolistic competition
Where a firm ensures that its own brand of a product is unique via special features and design