UNit 1 - examining business markets |
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Information
A market is any place, real or virtual, where goods or services can be traded. Each market will have its own structure which determines the amount of power and competition in the market. In this unit we focus on just two of there structures 'perfect competition' and 'imperfect competition' although it is important to note that there are at least four main types.
A market is any place, real or virtual, where goods or services can be traded. Each market will have its own structure which determines the amount of power and competition in the market. In this unit we focus on just two of there structures 'perfect competition' and 'imperfect competition' although it is important to note that there are at least four main types.
Perfect competition
> All businesses sell the same product at the same price > There are no barriers to entry, hence unlimited suppliers, producers and customers > All firms are price takers, i.e. they accept the price of a product within the wider market > All firms have a relatively small market share > There are no substitute products available |
Imperfect competition
> Businesses product lines are not identical > There are potentially significant barriers to entry > Business can determine their own price and the quality of goods or services may vary > The size of market share can vary, i.e. some firms hold large market share > Substitute products and services are available |
Hints & tips
The three key areas for our future research include:
> The number of firms competing in a given market - this may be defined by a geographical area. The strengths & weaknesses of competitors need to be understood.
> Freedom of entry - what are the requirements to enter the market? How much does cost and price influence a businesses ability to compete? What are the limitations on access to customers?
> Nature of the product - this often determines the market structure, freedom of entry, similarity of products otherwise available and whether the market can withstand another business entering.
The three key areas for our future research include:
> The number of firms competing in a given market - this may be defined by a geographical area. The strengths & weaknesses of competitors need to be understood.
> Freedom of entry - what are the requirements to enter the market? How much does cost and price influence a businesses ability to compete? What are the limitations on access to customers?
> Nature of the product - this often determines the market structure, freedom of entry, similarity of products otherwise available and whether the market can withstand another business entering.
Task 2
Watch the videos below and undertake your own individual research where necessary to ensure you have a sound understanding of :
> Market structure
> Perfect competition
> Imperfect competition
Watch the videos below and undertake your own individual research where necessary to ensure you have a sound understanding of :
> Market structure
> Perfect competition
> Imperfect competition
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