| A | B |
|---|
| Abnormal profits | This is extra profit that can be earnt in less competitive markets. |
| Artificial barriers to entry | These are restrictions made by powerful firms to prevent other firms from entering the market. |
| Barriers to entry | A way of preventing new firms from entering a market. |
| Branding | Where firms try to differentiate their product in order to reduce competition from rival firms. |
| Cartel | A group of large firms that collude in order to ensure high profits. |
| Competition policy | Refers to any measure that can be taken by government to control the behaviour of monopolies and oligopolies. |
| Consumer sovereignty | A situation in perfect competition where consumers can get what they want at prices that are low. |
| Freedom of entry and exit | Firms can freely enter or leave an industry if they wish. |
| Homogeneous product | An identical product. |
| Market structure | How a particular market is composed. It tells us how many firms and what size of firms are involved in that market. |
| Monopolistic competition | A market where there is competition but each firm tries to differentiate it's product. |
| Monopoly | A market where there is just one firm. |
| Natural barriers to entry | These include control of supply economies of scale high costs legal constraints. |
| Non-price competition | When firms try to create a want for their products for example by advertising. |
| Normal profit | Firms are earning just enough to keep them in business. |
| Oligopoly | A market where there are just a few large firms. |
| Perfect competition | A market where perfect use of resources are being made. There are many small and competing firms in this market. |
| Perfect information | All buyers will know all about prices and products on sale. |
| Price competition | When firms reduce their prices below that of their competition. |
| Price maker | A firm that can influence or dictate the price in a market. |
| Price takers | A situation where firms cannot influence or dictate the price in a market due to competition. |
