AQA A Level Economics Y2- Chapter 3

Market Structure - correct answer The Organisational and other charcetristics of a market Entry barriers - correct answer Obstacles that make it difficult for a new firm to enter the market Exit barriers - correct answer Obstacles that make it difficult for an established firm to leave a market Natural Barriers - correct answer Barriers that result from inherent features of the industry, such as economies of scale or high R&D costs; not barriers that are artificially made. Sunk Costs - correct answer Costs that have already been incurred and can't be recovered. Artificial Barriers - correct answer Barriers made by firms themselves, e.g. high levels of advertising expenditure or predatory pricing. Limit Prices - correct answer Prices set low enough to make it unprofitable for other firms in the market who aren't benefitting from economies of scale Predatory Pricing - correct answer Prices set below below firms average costs (or very cheaply) with the aim of forcing rival firms out of business as they cannot afford it. Product Differentiation - correct answer The marketing of generally similar products with minor variations or the marketing of a range of different products. Divorce of ownership from control - correct answer The owners and those who manage the firm are different groups with different objectives. Satisficing - correct answer Achieving a satisfactory outcome rather than the best possible outcome Monopoly - correct answer A marke with only one firm Static efficiency - correct answer Efficiency (e.g. productive and allocative efficiency) at a particular point in time Dynamic efficiency - correct answer Occurs in the long run, leading to the development of new products ad more efficient processes that improve productive efficieny