Basmah Hussain - Copy of Competition Presentation

Question 1

Three major types:
Types of Competition
Perfect Competition:

Answer 1

Market is dominated by many, many smaller companies.
None of the companies have any market control
Prices offered largely based on demand & supply
EX: dentists, realtors, lawyers

Question 2

Oligopoly:

Answer 2

Market is controlled by a small number of large companies
EX: banks, cell phone companies, grocery stores, video game systems

Question 3

Monopoly:

Answer 3

Market is controlled by one company
EX: LCBO, Canada Post, Ambulance

Question 4

3. Monopolistic Competition:

Answer 4

A combination of Perfect Competition and Monopoly
In this market structure, many buyers and sellers sell differentiated products that are closely related to other products available in the market.
Like perfect competition, it has numerous competitors
Like monopoly, each of the competitors will be different in their own way
For example, the market for music in which there are many singers, and each one is different from the other.

Question 5

Is Competition Good?
Competition provides many benefits for consumers, such as:

Answer 5

Better prices
More selection/Variety
Better quality/Increased features/Innovation (R&D)

Question 6

Direct Competition

Answer 6

Consumers choose to spend $ between very similar G&S
EX: movie theatres – AMC & Famous Players

Question 7

Indirect Competition

Answer 7

Consumers choose to spend $ on less similar G&S, but within the same industry
EX: Entertainment industry – movies, sporting events, bowling alley, night club, Timmies

Question 8

Productivity

Answer 8

Competition forces prices to fall
To reduce costs and pass savings to customers, companies are forced to become more efficient (use less resources).
Research & development is an important way for competitors to become more innovative and efficient
EXAMPLE:
Honda Manufacturing – Employee Suggestion Box