2.5.3 The Competitive Environment

Question 1

what is a highly competitive environment

Answer 1

• one in which many businesses are operating selling similar goods or services

Question 2

what may a business in a highly competitive market do to stay competitive?

Answer 2

• increase marketing
• diversify products
• adjust pricing strategy

Question 3

how does a competitive environment affect consumers

Answer 3

+ Get the lowest price among all substitutes
+ Businesses are highly innovative
- customers can be cut off supply if businesses start to fail

Question 4

larger markets have more __________ _________and therefore attract more ______________ . this means that larger markets tend to be more ______________ .

Answer 4

potential customers, businesses, competitive

Question 5

what are the 3 types of competition between businesses

Answer 5

perfect- competition on an equal basis
opiology- a small number of large firms dominate the market
monopoly- one business has complete control over the market and there is no competition