5.8 Dynamics Of Competition And Market Processes Flashcards
1
Q
What is a long run benefit of competition
A
Firms are likely to be more productively and allocatively efficient as they provide the goods consumers want
2
Q
What is a short run benefit of competition
A
Firms might make supernormal profit which can be reinvested back into the firm
3
Q
Who proposed the idea of creativ destruction
A
Schumpeter
4
Q
What is creative destruction
A
The idea that new entrepreneurs are innovative which challenges new firms in the markets.
The more productive firms then growing, forcing the least productive out of the market
5
Q
What does creative destruction lead to
A
More innovation and the production of new goods and services
