MONEY: Choosing to Spend
What you need to know...
- How does our demand change over the personal life cycle? (see below)
Markets & how they work
- A market exists when buyers and sellers come together; but nobody mentioned a train (watch the video below)!
- How are scarce resources allocated in a market free from government intervention; an invisible hand perhaps? (watch the video cartoon below)
- What alternatives are there to a free market based system to allocate scarce resources? In the UK we have a mixed economy; is there another type of economy? (watch the video below)
- See the video below for revising supply (and a little recap on demand too)!
How businesses compete
- Non Price Competition Firms compete for market share and the demand from consumers in lots of ways. We make an important distinction between price competition and non-price competition. Price competition can involve discounting the price of a product to increase demand. Non-price competition focuses on other strategies for increasing market share.
Consider the example of the UK supermarket sector where non-price competition has become important in the battle for sales
Traditional advertising / marketing
The benefits of competition
What are the potential gains from increased market competition?
- Indeed Bristish Dairy Farmers have protested about the price cuts on their milk (click this link)
- Watch the video below which details the issues surrounding competition within the dairy farming market and its effect on the industry and consumers
The increase in competition has resulted in firms cutting costs to compete. This has reduced the quality of goods which some argue do not last as long. The cheap items may have also created a disposabal culture, where consumers are quick to throw things away. This carries a cost for other people who we share the planet with.
Strecth & Challenge
- Increasing the level of competition within a market does not always bring the benefits
- Can you find an example of a market, other than the supermarket industry, where increasing the level of competition has led (or would lead) to drawbacks?
- Blog your response using the website's Forum