Theme 6 II F: Firms and Decisions

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4 Terms

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State command and market-orientated policies

Command measures 

Market-oriented Measures

  1. Regulation

  2. Deregulation

  3. Regulate pricing

  4. Nationalisation (Public ownership)

  1. Subsidies

  2. Corporate taxation

2
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Describe MonoC, Oligo, Mono on whether need GI

MonoC

  1. AE: Extent of welfare loss not severe 


  1. Normal profits in LR -> equity 


Overall: Benefits > costs -> no GI 

Oligo and mono 

  1. AE: High market power -> large extent of welfare loss 

  2. Supernormal profits in LR -> inequity 


Overall: 

  • Monopoly: yes GI 

  • Oligopoly: yes GI in more concentrated (heading towards a monopoly - collusion) 

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Define market dominance

  • Market dominance (Def.): Extent to which the total output in a market is produced by one firm 

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Describe aim of CCCS

  • Aim of CCCS: Ensures firms battle on a level playing field and compete through greater efficiency, lower pricing, and improved products so that consumers benefit from lower pricing, new products, and greater choices