Summary

Summary chapter 18 Business Competition

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Course
Pearson Edexcel Economics

Institution
Pearson Edexcel Economics

This document serves as an excellent summary of Chapter 18, covering the topic of business competition. It is a valuable resource that will prove to be highly advantageous when addressing essay-type questions in your upcoming examinations.

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Which chapters are summarized? Chapter 18
Uploaded on September 28, 2023
Number of pages 2
Written in 2023/2024
Type Summary

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18 BUSINESS COMPETITION

Competition; it is the rivalry that exists between firms when trying to sell goods and services in a
particular market.

Competitive Markets

A competitive market is one in which a large no. of producers compete with each other to satisfy the
needs and wants of large number of customers

Features of a competitive market

 A large number of buyers and sellers
 Close substitutes
 Low barriers to entry
 Price takers
 Complete information
There is a free flow of information about all the products for both supplier and buyers(features f
the product, discounts, price, outlets)

Competition and firms

Advantages of competition to firms

 High productivity
 Self improvement through innovations and product diversification
 Problems of the market can be solved as a team (diversification of risk due to more businesses)
 Opportunity to access new customers (international market)

Disadvantages of competition to firms

 Low revenue due to low prices
 Less finance to invest on research and development
 High cost on advertising and promotions
 Workers productivity is low as the workers are paid low due to low revenue

Competition and consumers

Advantages of competition to customers

 Lower price
 More choice and new features
 Better quality products
 More discounts

Disadvantages of competition to customers

 Market uncertainty; firms might leave due to unprofitability leads to limited choice
 Lack of innovations; bez firms have low profits .’. unable to spend on R and D
 Fall in living standards; due to low profits firms will redundant workers to be price competitive

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