Competition and Market Power (HSC SSCE Economics): Flashcards

Ability to raise prices above competitive level w/o losing customers

No. of firms, nature of product, ease of entry/exit

Firms that must accept market price (pure competition)

If charge above market price, lose all customers to competitors

Firm that can determine product's price to maximise profit

Making products appear distinct from competitors' offerings

Customers prefer a firm's product & willing to pay slightly more

Firms constantly monitor & respond to rivals' behaviour

Competing through advertising, service quality, not price cuts

Prices fall and output increases