Markets (Unit 1)

What is a private sector business ?

A business owned by individuals or shareholders

What are the characteristics of a private sector business ? (4)

• privately owned

• Profit motivated

• Competitive environment

• Financed by owners or investors

What is a public sector business?

organisation owned and controlled by the government

What are characteristics of a public sector business? (3)

• Funded mainly by taxation

• focus on public welfare

• Provide essential services

What is a public good? Example ?

We all benefit from them without paying for them eg. Street lighting

What are the 2 features of public goods?

• no excludability

• non-rivalry

What are merit goods?

Good and services that provide benefit to both the individual and society

What is a market?

Any place that buyer and seller come together to exchange goods or services

What are 6 ways a market can be segmented ?

1. Demographic

2. Geographic

3. Income

4. Psychographics

5. Lifestyle

6. Culture

What are the 3 ways of demographic segmentation?

• gender

• Age

• Social class

What is psychographic segmentation ?

Splitting the market based on personality and emotionally based behaviour

What is lifestyle segmentation ?

Splitting the market according to the way they lead their lives and attitude they share

What are the 5 benefits of market segmentation?

• Advertising can be targeted

• Most profitable and least profitable customers can be identified

• Least profitable market can be avoided

• Easier to identify needs and launch new products

• Greater variety of good and services in a market

What are the 3 drawbacks of market segmentation?

• segments are too small

• Costs

• Products is completely new

What is the market structure?

The number of firms without an industry (market)

What is a monopoly?

One firms dominate the market

What is an oligopoly ?

Few firms dominate the market

What is monopolistic competition?

Many firms but some differentiation in the product

What is perfect competition ?

Hypothetical market where competition is at its greatest possible level

What are the assumptions made in perfect competition? (4)

• Large number of producer

• Identical products

• Freedom of entry and exit

• Readily available information

What is the % market share for a business to be considered a monopoly ?

25%

What are the 2 ways barriers to entry exists in a monopoly ?

• High costs to enter

• Economies of scale