Competitive Markets

Learning Outcomes:

Advantages and disadvantages of competition to firms, consumers and the economy in general 

• Efficiency

• Choice

• Quality

• Innovation

• Price

Characteristics of a competitive Market

• Lots of firms and consumers

• Very similar products

• Easy for businesses to join the market- "low barriers to entry"

• Very elastic if not perfectly elastic Demand- very hard for firms to raise prices

• Free flow of information- consumers know about all the choices and products in the market.