Impact of Competition on the Quality, Quantity & Price of Goods

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Organizational Incentive Programs: Profit Sharing, Gain Sharing, and Employee Stock Ownership

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:04 Competition & Economics
  • 0:27 Buyers & Sellers
  • 1:57 Domestic & International
  • 3:16 Lesson Summary
Add to Add to Add to

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Login or Sign up

Timeline
Autoplay
Autoplay

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Tonya Brewer
In this lesson, we will learn about the impact of competition on the quality, quantity and price of goods. The relationship between competition and the production of goods is directly related and affects the price we pay as consumers.

Competition & Economics

One of the central questions in economics is the effect of competition on prices. Many studies have been devoted to this very topic in the hopes of explaining the impact on consumer goods. When discussing economics, competition is the rivalry among the producers to achieve increasing profits, higher sales numbers, etc. In other words, companies wish to sell as much as possible while making the most money.

Buyers & Sellers

The theme throughout economics can be defined very easily: 'Buyers and sellers interact, and at the right price all products are sold.' In the perfect world, this would happen every day without issues. As you know, we do not live in a perfect world, and many factors can affect economics. In the consumer world, the price of a good or service is determined by supply, demand, and competition among producers.

Buyers compete with one another. If you think about the most recent holiday shopping season, you can probably remember one popular toy that every child wanted to have. The producers of that toy were aware that their product was in high demand, and they used this knowledge to set the price of the toy for consumers. Competition determines market price because the more that toy is in demand (which is the competition among the buyers), the higher price the consumer will pay and the more money a producer stands to make.

Not only does the demand of consumers for the product affect price, but so does the relationship among the different producers of the product. Competition among sellers usually deals with who has the best price. This will also help determine the price parents will have to pay for that toy from earlier. Greater competition among sellers results in a lower product market price. If the same popular toy had numerous producers instead of only one, the price would be lower because the producer knows the consumer could get the toy somewhere else.

The cycle of competition between sellers never ends. People are always battling for goods that the sellers have, and people's wants are endless. As long as there are buyers wanting things, then there will be competition between sellers.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create An Account
Support