Introduction to Finance and Economics - Revision for Exam

These flashcards cover key concepts related to market structures, elasticity in economics, agency problems, and corporate governance relevant for the finance and economics exam.

Market Structures

Different types of market forms, such as perfect competition, monopoly, monopolistic competition, and oligopoly.

Perfect Competition

A market structure with many producers of a homogeneous good, where no single seller can influence the market price.

Monopoly

A market structure characterized by a single producer of a unique good with high barriers to entry for other firms.

Oligopoly

A market structure dominated by a few large firms, which may produce homogeneous or differentiated products and have significant control over prices.

Monopolistic Competition

A market structure with many firms selling slightly differentiated products, allowing for some control over pricing.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in its price.

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in the best interest of another.

Corporate Governance

The system by which companies are directed and controlled, addressing the relationship between shareholders and management.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market.

Time Value of Money

The concept that money available today is worth more than the same amount in the future due to its potential earning capacity.

Cross-Price Elasticity of Demand

The measure of responsiveness of the quantity demanded of one good to a change in the price of another good.

Project Evaluation (Discounting Methods)

Techniques used to assess the viability of a project by discounting future cash flows to their present value.

Tacit Collusion

An implicit agreement among firms to avoid competitive practices without formal communication.

Adverse Selection

A situation in which one party in a transaction has more or better information than the other, often leading to poor decisions.

Moral Hazard

The risk that one party will change its behavior to the detriment of another party after a transaction has occurred.