Economics: Topic 4, Year 1 Definitions

Describes the characteristics of the market that affect the ways in which firms compete and also the welfare of consumers within the market.

Describes a market structure in which there are many buyers and sellers. There is freedom of entry into the market and freedom of exit out of the market. Buyers and sellers all possess perfect knowledge and all firms supply homogeneous goods.

Describes 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.

A market structure in which the supply of goods is dominated by a few firms. There are barriers to entry into the industry and barruers to restrict exit from the market by firms. Although some knowledge may be widespread, firms in this market are likely to possess some knowledge that is not available to others.

A market structure in which there is only one firm supplying all the goods in an industry. There are barriers to entry into the industry that have prevented any competition from other firms. Perfect knowledge does not exist because a monopolist is likely to possess knowledge that other participants in the market do not have.

The degree to which buyers view a good as being distinct from the alternative goods being supplied by other firms within that particular market.

The degree to which a new firm can enter/start supplying a market without experiencing factors that give it a competitive disadvantage against existing firms within the market.

Increasing the firm's sales volume or total revenue over a period of time, usually measured over a period of one year.

The percentage of total sales in a market that is achieved by one particular firm.

The state of continuing to exist or avoid failure. A firm that fails to survive will go into liquidation or bankruptcy if it is unincorporated, such as a sole trader or partnership.

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.

Arises when firms exert considerable influence in a market because of their relatively large size.

Exists when there is a single supplier in a market.

Measures the combined market share of the the largest firms in a particular market.

Measures the combined market share of the four largest firms in a particular market.