Types of Competition Flashcards
1
Q
3 Major Types of Competition
A
- Perfect
- Oligopoly
- Monopoly
2
Q
Perfect Competiton
A
- Market is dominated by many smaller companies
- None of the companies have any market control
- Prices offered largely in supply and demand
- Ex. Dentists, realtors, lawyers
3
Q
Oligopoly
A
- Market is controlled by a small number of large companies
- Ex. Banks, cell phone companies, grocery stores, video game systems
4
Q
Monopoly
A
- Market is controlled by one company
- Ex. LCBO, Canada Post, Ambulance
5
Q
Is competition good?
A
- Better prices
- More selection/variety
- Better quality/ increased features/ innovation
- 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 (R&D) is an important way for competitors to become more innovative and efficient
- Ex. Honda Manufacturing – Employee Suggestion Box
6
Q
Indirect Competition
A
- Consumers chose to spend their $ on less similar G&S that are still within the same industry
- Ex. Entertainment industry: movies, sporting events, bowling alley etc.
7
Q
Direct Competition
A
- Consumers chose to spend money on very similar G&S
- Ex. McDonalds, Burger King, Wendys
