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Market structure | O Level Economics 2281 & IGCSE Economics 0455 | Detailed Free Notes To Score An A Star (A*)

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  • Competitive Markets
    • Customer base is increased by winning against competition, along with profits and shares
    • Price competition
      • Lowest prices or best possible prices
    • Non price competition
      • Where the focus is excelling in aspects other than price
    • Informative advertising
      • Advertisement that focuses on the features of the product and providing information about it
    • Persuasive advertisement
      • Advertisement that focuses on the customer wants and tries to stimulate their likeness for a product, including their interest in it.
  • Pricing Strategies
    • What influences price?
      • Strength and level of consumer demand
      • Competition in the market
      • Production cost and target profit level
  • Price Skimming
    • Unique and new product launched at an exceptional price
    • Usually where there are no competitors
    • Or the brand wants to create a feel of luxury
  • Price Penetration
    • Lower than market price to create place for itself in the market
    • Where rival products are there
    • New market with competition being entered
  • Destruction Pricing
    • Also called predatory pricing.
    • Extremely low prices so that no one else can sell their products.
  • Price Wars
    • Here, rivals continue to charge lower than each other.
  • Cost plus pricing
    • Just add a markup to the total cost as a percentage and sell the product.
  • Perfect Competition
    • Many sellers and many buyers
    • Identical products
    • Both the producer and the customer fail to influence the market prices
    • No one is price giver, they are all price takers
    • Too high price loses customer
    • Too low price will incur a huge loss
    • Benefits
      • Consumer is the king with wide product choices for the same product
      • Prices are low and competitive
      • To ensure that profits occur, the companies have to ensure maximum efficiency, as lack of efficiency will reduce the quality
    • Disadvantages
      • Competition can be wasteful and resources can get wasted
      • Customers are given misleading marketing to ensure that the benefits can be gained from each new customer
  • Monopoly
    • One or a few dominant firms in the market that have the market power to keep others out of the competition
    • Pure monopoly
      • Only one single seller
      • Therefore, they are the price givers and they can ensure whatever price they want to charge
    • Super barriers to entry
      • So competition comes rarely
      • Sunk costs or initial fixed costs are very high
    • Problems
      • Consumer sovereignty is very low
      • Prices are very high
      • Quality is low because no incentive to improve quality
      • Customer demands may not be responded quickly
      • Super inefficiency because they can charge high prices so no incentive to ensure efficiency
  • Monopoly can be good
    • More output than multiple firms in the market as single producer with economies of scale
    • Competition from overseas firms
    • If new firms enter, products at low cost and high quality
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Hunain Zia has previously achieved considerable success in the high-school educational stream, gaining a massive 154 Total A Grades and 7 Major Distinctions, a process in which he broke/ set 11 different world records, including the most A grades ever achieved, most subjects ever appeared in, most distinctions, gaining distinctions across two separate boards (Pearson Edexcel and CAIE) within the same year/ ever, and even 19 hours of constant examination. All records stand intact today. Hunain pursued his Honors Accounting Degree from the prestigious Bentley University, and then completed an LLB (in Honors) from University of London. Currently, he manages multiple social and commercial projects, has founded digital streams and works tirelessly in the education sector.

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