-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
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Productive Effiency
In competitive markets businesses need to:
minimise costs
accept market price
keep up with development
Operating at minimum costs means high effiency & no waste
Allocative Effiency:
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.
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