More Flashcards

1
Q

competitive market

A
  • A market in which there are many buyers and many sellers so that each has a negligible impact on the market price.
  • Price takers, more than one firm.
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2
Q

Pros of competitive markets

A
  • Competition encourages better quality

- Competition encourages better prices

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3
Q

Cons of competitive markets

A
  • Competition can put smaller firms out of business
  • Competition can make profits less
  • A lot more resource use for advertisements and less for productiveness
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4
Q

Monopoly (non-competitive markets)

A
  • Sellers who have no competition
  • Only ones selling a product
  • Eg. Western power (only one you can buy energy from), Aus. Post because there’s only one that provides these services
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5
Q

Pros of Monopoly (non-competitive markets)

A
  • Can sell for higher price because people are forced to buy form them
  • No need to spend money on advertisements
  • Non-competitive markets allow firms to sell their products at very high prices this may also not be good because there might not be a lot of people who can be therefore there will be a lower living standard
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6
Q

Cons of Monopoly (non-competitive markets)

A
  • Does not encourage innovations because they are the only company with that product
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