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3.13, 3.14 - Coggle Diagram
3.13, 3.14
Perfectly competitive
Large number of buyers and sellers in the market
Buyers and sellers have perfect information about what is happening in a market.
Market price is determined by interaction between buyers and sellers in a market
Each good or service is identical (firms produce uniform products.)
No barriers to entry
Objectives of firms
Profit maximisation
Sales maximisation
Increase market share
Social/ environmental concerns
Concentration ratio
Expresses a firms market share as a percentage
Monopoly- 1 firm has 25+% concentration ratio
Oligopoly- A small amount of firms, with altogether 50-60+% market share.
Pure monopoly- 1 firm has 100% concentration ratio
Drawback of monopolies
No competition
High prices
Low innovation
Lower quality
Benefits of monopolies