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Question 1

competitive market

Answer 1

• 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.

Question 2

Pros of competitive markets

Answer 2

• Competition encourages better quality

- Competition encourages better prices

Question 3

Cons of competitive markets

Answer 3

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

Question 4

Monopoly (non-competitive markets)

Answer 4

• 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

Question 5

Pros of Monopoly (non-competitive markets)

Answer 5

• 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

Question 6

Cons of Monopoly (non-competitive markets)

Answer 6

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