ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Producers share their resources equally.
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Producers look to the government to divide resources.
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Producers improve the quality of their goods to increase sales.
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Producers raise prices since they expect to sell fewer items.
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Detailed explanation-1: -Competition stimulates firms to lower their own costs and run their businesses as efficiently as possible. But when competition is restricted – such as by one company acquiring most competitors or reaching agreements on prices with other competitors – prices are likely to increase and quality is likely to also suffer.
Detailed explanation-2: -It has the potential to drive costs (and prices) up. Marketing costs are increased and producers will try to pass these on to their customers. Inventions and innovations cost producers in time and research and development in order to be in front of their competitors.
Detailed explanation-3: -Competition in America is about price, selection, and service. it benefits consumers by keeping prices low and the quality and choice of goods and services high. Competition makes our economy work. By enforcing antitrust laws, the Federal trade Commission helps to ensure that our markets are open and free.
Detailed explanation-4: -that the effect of increased competition in the symmetric equilibrium is a reduction of prices. Thus, if customers value the increase in quality, then firms, in a symmetric Nash equilibrium, will react to an exogenous increase in the number of firms by reducing prices and increasing quality.
Detailed explanation-5: -The producers need to “compete” to try to attract more consumers, usually by lowering prices, offering better versions of the goods or services, or through marketing. Competition is the core concept of the Market Economy.