Economics: Topic 3, Year 2 Definitions - Statistics

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Definition	Answer	% Correct
A market structure in which the supply of goods is dominated by a few firms. There are barriers to entry into the industry and may be barriers to restrict exit from the market by firms. Although some knowledge may be widespread, firms in oligopoly markets are likely to possess some knowledge that is not available to others.	Oligopoly	100%
An agreement to restrict competition between firms.	Cartel	67%
The difference between the price a buyer would pay and the price actually paid by the buyer.	Consumer Surplus	67%
Measures how well inputs are used to produce an output.	Efficiency	67%
A market structure in which there are many buyers and sellers. Firms supply similar, but differentiated, goods. There is freedom of entry into the market and freedom of exit out of the market. Knowledge amongst buyers tends to be widespread but is not perfect.	Monopolistic Competition	67%
The difference between the price received by a firm and the price it would have been prepared to accept in return for supplying.	Producer Surplus	67%
Measures whether the goods and services produced are those that consumers want. It means that no consumer can be made better off without another consumer becoming worse off.	Allocative Efficiency	33%
A market in which behaviour of existing firms is affected by the fear of new competition or takeover.	Contestable Market	33%
Looks at changes over time, arising from new technology, innovation and invention.	Dynamic Efficiency	33%
An individual business unit providing particular goods and services.	Firm	33%
Describes firms that enter markets where supernormal profits exist in order to make a quick profit.	Hit-and-run Competition	33%
Comprises a group of competing firms that provide the same goods and services.	Industry	33%
The addition to total costs arising from making one more item.	Marginal Costs (MC)	33%
The addition to total revenue as a result of the sale of one more unit of output.	Marginal Revenue (MR)	33%
Describes the characteristics of the market that affect the ways in which firms compete and also the welfare of consumers within that market.	Market Structure	33%
What arises when firms exert considerable influence in a market because of their relatively large size.	Monopoly Power	33%
Occurs when firms agree to compete through activity, such as marketing, but not through change in price. It usually takes the form of marketing activities such as advertising and promotions. However, it is a more significant characteristic of oligopoly markets because this can create product differentiation. Along with barriers to entry, successful product differentiation can lead to long-term supernormal profits, whereas in monopolistic competition product differentiation only leads to short-term supernormal profits.	Non-price Competition	33%
Occurs when a firm charges different prices to different customers, based on their willingness to pay rather than on differences in the cost of supplying to them.	Price Discrimination	33%
This exists when the market leader sets a price that smaller competitors follow.	Price Leadership	33%
Arises when production occurs at the lowest possible cost.	Productive Efficiency	33%
This exists when there is a single supplier in a market.	Pure Monopoly	33%
Measures efficiency at a point in time; productive efficiency and allocative efficiency are both measures of this.	Static Efficiency	33%
The costs that have already been incurred and cannot be recovered.	Sunk Costs	33%
This exists when firms in an oligopolistic market work together in order to reduce the level of competition.	Collusive Oligopoly	0%
The actual management of a firm and the organisation of decision making within it.	Control	0%
The incessant process by which innovation and new technology constantly lead to the introduction of new production units that replace outdated ones.	Creative Destruction	0%
The separation of the two entrepreneurial functions, so that control is exerted by individuals who are not necessarily the main owners of the firm or organisation.	Divorce of Ownership and Control	0%
The behaviour of a firm in terms of its actions in its market and its responses to actions taken by competitors.	Market Conduct	0%
This exists when firms in an oligopolistic market do not work together to reduce the level of competition.	Non-collusive Oligopoly	0%
A market in which existing firms are not affected by the fear of new competition or takeover and so they use any monopoly power that they possess in order to make supernormal profits.	Non-Contestable Market	0%
The provision of finance to a firm in return for a share of profit. It involves undertaking financial risks.	Ownership	0%
When oligopolists agree not to compete on the basis of price.	Price Agreements	0%
A firm that has to accept the equilibrium price set by the market in which it operates. Any quantity of goods that it supplies will be sold at the market price.	Price Taker	0%
When oligopolists compete by cutting prices in order to increase their market share.	Price War	0%
Where output is maximised from the available inputs of factors of production.	Technical Efficiency	0%
When firms aim for minimum acceptable levels of achievement in terms of profit, revenue and market share.	The Satisfying Principle	0%

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