How Comp Effects Markets:
-Competiton: is a powerful stimlus, have to work harder to attract customers
-Competition can help to keep prices down
-In a competitive market businesses cannot charge more than rivals- they wont do well!
-Businesses in comp markets have to control costs to make a profit!
-Profit = Sales Revenue - Costs
In competitive markets businesses need to:
accept market price
keep up with development
Operating at minimum costs means high effiency & no waste
businesses compete to get the resources they need.
resources = a business cost!
Allocative Effiency occurs when resources are allocated between competing areas in a way that matches the requirement of the consumer to the greatest possible extent.