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Business Economics (Market forces (Market demand curve (Law of demand (The…

- - - - The lower the price, the more quantity demanded
  - - - The higher the price, the greater the quantity
        sellers are willing to sell
- - - - Single firm controls the market
      - High profits
    - - Small # of firms offing similar products
      - Firms acknowledge strategic interaction and may collaborate to maximise profits
    - - Many firms offering similar products
      - No strategic interactions - firms are too small relative to market to individual infuence
      - Intense competition and free entry dissipate profits
  - - - market if very fragmented
      - large # small firms
      - intense competion
    - - little fragmentation across market
      - few large sized firms
      - market approaches oligopoly conditions with
        low level of competition
  - - - used to analyse strategic interactions
      - provides a framework to inform decision-making
        when other decision-makers are part of the
        problem
  - - - All firms sell homogeneous product
      - Firms have same marginal cost c
      - Each firm sets price independenty
      - Standard demand assumptions
      - If firms quote same price they split profit
      - If firms quote different prices, consumers purchase from firm selling at lowest price
    - - Whenever your competitor prices above cost, it pays to undercut
      - Seller with lowest price takes all of market