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In theory, perfect competition means that consumers can buy identical goods or services from different sources. Buyers have a natural tendency to buy things that are perceived as less expensive. As the price for one source drops, the entire customer base will quickly flee to the cheaper price until the supplier is no longer able to service the increased demand. In the mean time, the other suppliers will have dropped their prices to reacquire market share, or will leave the market if they can no longer compete at the established price. This creates a de facto monopoly in the last remaining supplier, who can then raise prices dramatically, even though the increased volume may have actually reduced the unit costs through various scales of economy. The total profit increase can be dramatic and may quickly stimulate regulatory concerns.

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Suppose a good or service Oh s highly desired but the quantity supplied is limited How does competition among consumers affect profits for the selling firms?

When a good or service is highly desired but the quantity supplied is limited, competition among consumers typically drives prices higher. As consumers compete for the limited quantity, they may be willing to pay more, which can significantly increase the profits for selling firms. This heightened demand can lead firms to maximize their pricing strategies, capitalizing on the scarcity. Consequently, firms can see substantial profit margins until supply can potentially adjust to meet the demand.


How does competition affect producers and consumers?

i can't answer this lol


How does competition among too few sellers affect price?

When competition is limited to too few sellers, they can exert significant control over prices, often leading to higher prices for consumers. This lack of competition may result in price-fixing or collusion, as sellers may coordinate their pricing strategies to maximize profits rather than responding to market demand. Consequently, consumers have fewer choices and may face decreased product quality and innovation. Overall, the scarcity of competition can lead to market inefficiencies and reduced consumer welfare.


How did monopolies trusts and holding companies affect big business?

Monopolies, trusts, and holding companies significantly shaped big business by consolidating market power and reducing competition. These entities allowed firms to control prices, limit production, and eliminate rivals, leading to increased profits for the dominant companies. However, their practices often resulted in public backlash and calls for regulation, as they could stifle innovation and harm consumers. Ultimately, these structures contributed to the creation of antitrust laws aimed at promoting fair competition in the marketplace.


Government actions that affect business profits are called?

taxes

Related Questions

How government actions affect business profits?

Government is the one that implements laws, regulations, and rules that governs the whole trade and commerce industry - and so whatever their actions are, if largely affects how business and companies earn profits from consumers and through their selling.


How does competition affect producers and consumers?

i can't answer this lol


What are Legal and Regulatory Forces?

Legal and regulatory forces are laws that protect consumers and competition and government regulations that affect marketing.


How can legislation affect personal selling?

Many laws affect personal selling and give all consumers protection from unsafe product and unscrupulous traders .sales staff need to know the specific regulations that relate to the product or service they sell


What was a positive affect of high tariffs?

higher profits - apex


What is deregulation and did it affect certain industries in the 1980?

Deregulation is the cutting back of federal regulation of industry and it affected certain industries in the 1980s by increasing the competition and lowered prices for consumers.


What is the deregulation and how did it affect certain industry in the 1980s?

Deregulation is the cutting back of federal regulation of industry and it affected certain industries in the 1980s by increasing the competition and lowered prices for consumers.


How does photosynthesis affect upper level consumers that are carnivores?

how does photosynthesis affect upper level consumers that are carnivores


How do consumers affect a business?

Consumers can affect a business based on consumptions of goods. The amount of goods that are bought and sold affect the profit and loss of a business.


Government actions that affect business profits are called?

taxes


Which best explains how a free market system has a circular flow of influences?

Consumers decisions affect producers, and producer decisions affect consumers.


What is gorvernment actions that affect business profits are called?

its called Taxes.