Quizzes & Activities

Economics of Monopoly (Revision Quizlet Activity)

Level:
AS, A-Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 2 Jan 2022

Here is a selection of key terms linked to the market structure of monopoly together with some quizlet revision activities.

Monopoly power in markets - some key terms to revise

  • Bi-lateral monopoly: Where a monopsony buyer faces a monopsony seller in a market
  • Concentration ratio: Measures the proportion of an industry's output or employment accounted for by the largest firms
  • Deadweight loss: Loss in producer & consumer surplus due to an inefficient level of production
  • Dominant firm: Business with more than 40 percent of market share
  • Entry barriers: Strategies used to protect the market power of established firms whilst maintain supernormal profits
  • Industry regulator: Appointed by government to oversee how a market works and the outcomes that result for producers and consumers
  • Limit pricing: When a firm sets price low enough to discourage new entrants into the market.
  • Market liberalisation: Introducing competition in previously monopolistic sectors such as energy supply, retail banking and postal services
  • Market power: Power to raise price above marginal cost without fear of losing supernormal profits to new entrants
  • Monopoly profit: Supernormal profit to a firm with market power, achieved when price (AR) > average cost
  • Natural monopoly: When long-run average cost (LRAC) falls continuously over a large range of output so only one firm can fully exploit economies of scale
  • Predatory pricing: A deliberate strategy of driving competitors out of the market by setting very low prices or selling below AVC
  • Price discrimination: Charging different prices to different groups of consumers for the same product for reasons not associated with the marginal cost of supply
  • Pure monopoly: The only supplier in an industry - with a 100 percent market share. The firm is the industry
  • Rent seeking: Behaviour by producers in a market that improves the welfare of one but at the expense of another. A feature of monopoly and oligopoly
  • Welfare loss: Overall reductions in consumer welfare when firms use their market power to raise price above a competitive level
  • Working monopoly: Business with more than 25 percent share of a defined market
  • X-inefficiency: When the lack of competition leads to higher average costs than necessary to supply a given level of output

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