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You should now have an understanding of what a market is and how competitive markets operate to determine price and output. You should also have an idea of some of the problems faced by businesses when trying to survive in the competitive business environment.
In this chapter you will look more closely at competition. In the real business world markets are often dominated by a business or a small group of businesses - price is not simply determined by supply and demand, but by the actions of these dominant businesses. You will need to understand the factors that decide how much competition exists in a market (the degree of competition) and how this affects the price setting powers of businesses.
Please make sure you attempt the tasks at the end of pages “Degree of competition 2” and “Price setting 2”.
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