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.
2
Q
Pros of competitive markets
A
- Competition encourages better quality
- Competition encourages better prices
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
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
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
6
Q
Cons of Monopoly (non-competitive markets)
A
- Does not encourage innovations because they are the only company with that product