1.2.18 Competitie Markets

• What are competitive markets


  a marketplace where there are a large amount of buyers and sellers and no single buyer or seller can affect the market.
• what are the five features of a competitive markets

  Large numbers of buyers and sellers

  Low barriers to entry

  no control over price

  high level of transparency

  close substitutes between firms
• What are four things that firms do to give customers their value for their money

  efficient working with low production costs

  good quality products

  decent prices

  innovating

  product differentiation
• why does charging low prices affect a firm?

  because it lowers the amount of profit made by them
• why could innovation negatively affect a firm

  high costs to produce innovative products
• why could the fact that there is a lot of firms competing against each other affect the firm negatively

  It makes survival more difficult
• why could the fact that there is a lot of firms competing against each other affect the firm positively


  lower barriers to enter, must operate efficiently to stay surviving
• why could innovation positively affect a firm

  higher quality of products
• how could consumers positively get affected by low prices

  they would like it because they would get high quality product for low price
• how can a firm closing down negatively affect a consumer

  the consumer could be very dependant on the firm, and would be upset if it closed down
• how does low profit affect a firm negatively


  because the firm wouldn't have money to spend in innovation, losing a customer's interest
• how does a firm increasing their quality of the product positively affect a customer

  because it is better, making the consumer more attracted to the product
• how does a firm increasing variety in their products positively affect a firm

  more choices to choose from