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Edexcel Economics 7. Market Structures

In this quiz the answers change every time you play! Guess the terms that fit these definitions
Answer must correspond to highlighted box!
Quiz by robalot39
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Last updated: March 9, 2020
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First submittedOctober 27, 2019
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Average score25.0%
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Description
Term
That which assumes firms and consumers have perfect knowledge
Perfect Competition
The fundamental feature of monopolistic competition
Product differentiation
That market structure under which long-run equilibrium is reached where average cost equals average revenue, all profits being normal
Monopolistic competition
Efficiency at a particular point in time and thus under particular market conditions
Static efficiency
Where one firm raises price to see if others follow suit thereby establishing a new market price, or if not, reduces price again to protect market share
Barometric Price Leadership
Obstacles that make it difficult or impossible for new firms to enter a market
Barriers to entry
That which arises where price equals marginal cost
Allocative efficiency
Does an oligopoly achieve productive and/or allocative efficiency?
No
A market in which incumbent firms make only normal profit, being unable to set a higher price without attracting entry due to the absence or limitation of both barriers to entry and sunk costs
Contestable Market
The slope of a demand/average revenue curve under a monopoly
Negative slope
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
That the problem of which is that it maximises joint rather than individual profits, thus incentivising firms to cheat at the expense of other members
Cartel
Where a firm is able to charge different groups of consumers a different price for the same product, such as senior discounts
Third degree price discrimination
A situation in game theory where each player's chosen strategy maximises payoffs given the other player's choice, so that neither has an incentive to alter behaviour
Nash equilibrium
That some prime of examples of which are; advertising, asset write-offs, lost consumer good-will, redundancy payments, &c.
Sunk costs
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 the disadvantages of which are that there is potentially more regulation and a threat that rival firms may enter the industry
Monopoly
The which assumes a market has no externalities
Perfect Competition
That which it is assumed a product has no actual or potential examples of under a monopoly
Substitutes
Where a firm sets price below average variable cost in an attempt to force rivals out of the market
Predatory pricing
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