Competitive Markets Flashcards

1️⃣ Familiarise yourself with the flashcards:

  • Look through all the flashcards to see what's on both sides.
  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

  • Look at the question or prompt on each card and try to remember the answer before flipping it over.
  • Check the answer and make a note of any cards you find challenging and need to go over more.

3️⃣ Consistently Review and Practice:

  • Use spaced repetition: spend more time on the cards you struggle with and go over them more often.
  • Regularly review all the flashcards to help you better understand and retain the information over time.

Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

PERSONALISED 1-TO-1 TUTORING

Need more help on this topic? Get 1-to-1 support

Get support with clear explanations, practice and feedback (Ages 5 to 16).

  • DBS-checked tutors
  • Flexible times
  • Parents can be updated

Want an ad-free experience? Subscribe to remove ads

What is a competitive market?

A market with many buyers and sellers. Products are similar. It is easy to enter or leave. No single firm controls the price.

Who sets the price in a competitive market?

Demand and supply set the price. Firms accept the going market price.

Why are firms called price takers in a competitive market?

If a firm charges more than the market price, buyers switch to rivals. So it must accept the market price.

What happens when new firms enter a competitive market?

There are more sellers. Supply rises. Prices tend to fall. High profits are reduced.

How does strong competition affect consumers?

It brings lower prices, more choice, and pressure for better quality and service.

Why does competition push firms to cut costs?

To keep prices low and keep customers. If costs stay high, the firm may lose sales.

What does easy entry and exit mean?

New firms can start up easily, and existing firms can leave without big costs or strict rules stopping them.

If a firm cannot raise price, how else can it compete?

It can improve quality, customer service, delivery, or branding. It can also cut costs to lower price.

Why is good information important in a competitive market?

It lets buyers compare prices and quality. Firms cannot overcharge, so competition stays strong.

How do changes in demand affect price in a competitive market?

Higher demand raises the market price. Lower demand reduces the market price.