Competition

2. Lowering average costs over time through using profit to fund research and development of new technology or new production processes
5. Where the allocation of resources is determined by supply and demand in the market and the price mechanism as opposed to command economies in which the government controls economic resources.
8. All buyers and sellers have complete information about prices and products in the market
10. When quantity demanded is not very response to changes in price
12. A licence which means no other firm can make that product for a number of years, giving them monopoly power. Often used for new pharmaceutical drugs to allow firms to earn back the high costs of developing the drug.
13. Money, time or resources that are gone and cannot be retrieved making them irrelevant to future decisions.
15. When increasing output leads to lower average costs
17. When there are a few large firms in the market. Oligopolies have the following characteristics. , Few large firms , High barriers to entry , Imperfect information , Similar yet differentiated product, Price maker (can set its own prices), Interdependent with other rival firms
19. When there is only one firm in the market. It has the following characteristics , One firm which is the entire market . Unique product with lack of close substitute, High barriers to entry , Imperfect information , Price Maker (can set its own prices)

1. When quantity demanded is very responsive to changes in price
3. A firm that is just entering a market as a new competitor
4. Rivalry between firms in a market. The more firms in a market, the more competitive it is
6. Things that make it difficult for a new firm to enter a market such as high start up costs, incumbent firms with economies of scale or legal barriers like patents.
7. When a firm must consider the response its rival firms will take to any of their own actions when deciding what course of action to take. for example if Firm A lowers their price, what will Firm B do? Firm A must consider this when making a decision on their own prices.
9. A firm that is already operating in the market
11. When a firm must accept the market price determined by the forces of supply and demand (seen in perfect competition)
14. When economic resources (land, labour, capital and enterprise) are allocated the most efficiently to best meet consumers wants and needs
16. Many firms, Many buyers , Homogenous (identical) product , Perfect information , No barriers to entry
18. When a firm is able to set their own prices rather than having to accept a market price. Seen in monopoly and oligopoly markets.