Студопедия.Орг Главная | Случайная страница | Контакты | Мы поможем в написании вашей работы!  
 

Answer these questions using your knowledge and experience



III

Competition refers to the rivalry among buyers and among sellers. Sellers compete by trying to produce the goods and services buyers want at the lowest possible price. Those unable or unwilling to sell at a price low enough to attract buyers will be unable to dispose of their goods and services. This rivalry benefits us all.

It benefits us by giving us the goods and services we want, when and where we want them. Producers know that if they don’t satisfy consumer demand, their competitors will.

It benefits us because producers must constantly strive to operate more efficiently. The quest of greater efficiency conserns scarce resources, increases output and raises living standards by reducing costs.

Buyers compete with one another because there is never around everything to go around. Those willing to pay the price can buy a steak. Those unwilling or unable to pay will substitute a less costly product like chopped meat, chicken or hot dogs. In other words, in the rivalry among buyers of steak, those unable to pay the price will lose to those who are able to pay.

If we think of private property, the price system and competition as providing the foundation of our free enterprise economic system, then profits and other economic incentives supply the cement that holds the structure together.

The role of economic incentives. Economic incentives influence our decisions about what and where to buy. The desire to achievethe greatest profit for our efforts is the principal economic incentive in the American and other market economies. Economists refer to this as economic self-interest.

Of course economic self-interest cannot explain human behavior. Workers may pass up the chance to earn more simply because they don’t want to move to another region. Business firms often reduce their profit by contributing to charitable or other public service organizations. Many parents forgo job opportunities to raise their children at home. And for many reasons other than price, consumers may prefer to shop at one store rather than another.

1 What does competition refer to?

2 How does the rivalry benefit us all?

3 Why do buyers compete with one another?

4 How do economic incentives influence our decisions?

5 What is economic self-interest?

UNIT 2





Дата публикования: 2014-12-10; Прочитано: 454 | Нарушение авторского права страницы | Мы поможем в написании вашей работы!



studopedia.org - Студопедия.Орг - 2014-2024 год. Студопедия не является автором материалов, которые размещены. Но предоставляет возможность бесплатного использования (0.005 с)...