3.1.4.5 The competitive market process

What is one way firms can try to distinguish their products and gain market share?

• By reducing prices

• By using non-price competition

• By increasing production

• By limiting supply

Which of the following is NOT a goal firms might aim to achieve?

• Improve the quality of the product

• Reduce costs

• Increase the number of employees

• Improve the quality of the service provided

Why might new firms struggle to compete on price terms with existing firms?

• Because they have better technology

• Because they have higher costs

• Because they have more employees

• Because they have better marketing

Improving the quality of service is particularly important in which industry?

• Manufacturing

• Agriculture

• Banking

• Construction

What could happen if firms compete vigorously with each other but monopoly power exists?

• Prices will decrease

• Consumers will be exploited

• Quality of products will improve

• More firms will enter the market

Why might consumers be charged high prices in a market with few firms?

• Because of high demand

• Because of low supply

• Because they have little choice where to purchase their goods and services

• Because of high production costs

What happens to consumer surplus when there are few firms in the market?

• It increases

• It remains the same

• It falls

• It fluctuates

What is one benefit of improving the quality of a product?

• It reduces production costs

• It keeps the product competitive in the market

• It increases the number of employees

• It decreases the market share

What is the result of firms being more productively efficient?

• They can compete better on price terms

• They need more employees

• They reduce the quality of their products

• They increase their prices