2. What is a competitive market? A competitive market exists where there are lots of sellers supplying similar goods who can easily enter and leave the market. There are also lots of buyers willing to buy. Most newsagents, supermarkets and other retailers operate in competitive markets.
An important characteristic of competitive markets is the ease with which new businesses can start up and compete with existing businesses. This characteristic ensures that existing fi rms in the market must always produce the best goods at the lowest prices. If they do not do this, new businesses can enter the market and take their customers.
Competitive markets are generally regarded as a good thing as they allow consumers to shop around and get the best possible price. This encourages suppliers to use resources effi ciently to meet the wants and needs of consumers.
Research
1. Identify a business in your local area. 2. Find out what businesses compete with the business you’ve identifi ed. 3. Do you think it would be easy for a new business to enter the market and compete with the existing businesses? Give at least three reasons for your answer.
4. In class work in pairs and swap and read one another’s work. LO 3.3 3.10
How do firms in competitive markets compete? Firms in competitive markets compete for customers by adjusting their marketing mix in different ways.
