Competiton

Question 1

Wha are the types of competition

Answer 1

Perfect
Monopoly
Oligopoly

Question 2

Whats perfect competition

Answer 2

This is a theoretical type of competition where there are lots of firms in the market that compete on an equal basis, their products are pretty identical along with their prices
They need to keep their costs low to keep prices low, otherwise demand would be taken by other competition.
They need to keep high quality products to keep a good level of demand

Question 3

Whats oligopoly competition

Answer 3

A small number of large firms dominate the market and charge similar prices, for a business to ‘get ahead’ they need to focus on marketing and brand image
Oligopoly firms tend to operate in a competitive environment meaning they need to be constantly improving their customer service by improving quality.

Question 4

What a monopoly

Answer 4

This is where one business has control over the market and there is no competition.
It can usually increase their prices without too much concern of demand decreasing and they are able to keep marketing costs low.

Question 5

Adv and dis of perfect

Answer 5

ADV
Productive efficiency = firms will produce at the lowest point if the cost curve. This will overall minimise waste and save cost
Consumer benefits = the firm will charge low prices. Due to the intense competition the firms are trying to lower their prices to as low as possible

DIS
Lack of innovation = products remain similar and due to the low profits means they can’t do market research, so no new products
Limited choice = there isn’t must consumer variety or branding due to all products being identical

Question 6

Adv and dis of oligopoly

Answer 6

ADV
Economies of scale due to these business producing lots of products
Price stability = the businesses dont compete through price therefore they stay relivity the same as they ficus more on service and quality
DIS
Barriers to entry = high start up costs and brand loyalty can make it really hard for the firm to enter the market
Inefficiency = this is the lack of competitive pressure can reduce productivity

Question 7

Adv and dis of monopoly

Answer 7

ADV
Low barrier to entry
Lots of market research (due to them having lots of money) products are differentiated to the consumer
DIS
Inefficiency = they do not produce at the minimum average cost, dont innovate
Expensive products for the consumer