Lesson 10: Competition

Question 1

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

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
• music

Question 5

Is Competition Good?

Answer 5

• Competition provides many benefits for consumers, such as:
• Better prices
• More selection/Variety
• Better quality/Increased features/Innovation

Question 6

Direct Competition

Answer 6

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

Question 7

Indirect Competition

Answer 7

Consumers choose to spend $ on less similar G&S, but within the same industry

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