3.8 monopolies and four factors of production

Four factors of production

Land, labour, capital and enterprise

2 types of market structure

perfect competition and monopoly

perfect competition

Many firms, identical products, easy entry/exit, no price influence, perfect information.

The advantages to consumers of competitive markets

Lower prices, Better quality, More choice, Innovative products, Encourage efficiency

Disadvantages of competitive markets for consumers

some companies might make lower quality goods, confusion,

Advantages of competitive markets for producers

Increased efficiency, innovation, improved quality, increased market share and exposure.

Disadvantages of competitive markets for producers

Cant control price, Lower market power, hard to enter market and less customers

Competitive markets

Markets where firms compete to attract customers and enhance efficiency

Monopoly markets

Market where a single firm dominates the selling of a product or service, will little or no competition.

competition policy

Regulations and laws that promote the competition in the marketplace to prevent monopolies and protect customers ensuring a fair price

Natural BTE

Obstacles that hinder new firms from entering a market, often due to high costs or unique resources.

Artificial BTE

Obstacles created by established firms to block new competitiors

labour intensive production

methods of production that use high levels of labour in comparison to capital equipment

capital intensive production

methods that make more of machinery relative to labour

Perfect competition

Many buyers and sellers, perfect knowledge.

production

total output

productivity

the output per factor of production in an hour.