Unit 2- Competition

Question 1

Define competition

Answer 1

the suppliers aiming their similar products at same group of consumers

Question 2

Define a market

Answer 2

Refers to the interactions between buyers and suppliers of a product

Question 3

Define a monopoly

Answer 3

100 procent market share ( pure monopoly)

Question 4

Define a legal monopoly

Answer 4

A business that has over 25 procent market share

Question 5

Situations when businesses face low competition

Answer 5

When a business is the only provider in that area
When a business has a unique product

Question 6

Impact of increased competition
Pros and cons

Answer 6

Pros: revenues- competitors spend money on advertising and attract more customers to the market
Motivating for staff
Costs:
Investment in training and new machinery many increase productivity reducing average unit cost
Incentive to grow and benefit from economies of scale
Cons:
Revenue= p x Q
A lower quantity of sales
The need to reduce selling price

Question 7

Define risks

Answer 7

Chance of negative outcome, occurring as a result of an action. uncertainty

Question 8

Internal risks

Answer 8

Marketing issues (damage to brand image)
Operational issues (machines break down and orders aren’t met)

Question 9

Define external risks

Answer 9

Technological (internet competition)
Economic

Question 10

Entrepreneurs take risk of starting business because

Answer 10

To make profit
Because they can take steps to manage the risk
To pursue an interest