Monopolistic markets lie between pure perfect competition and pure monopoly. Within this type of market a firm's product will differ to that of its rivals, the difference may only be small (for example the packaging may be slightly different), or there could be a big difference. The various firms within this market type have the ability to look at the differences between their own products and that of their rivals products, this gives them some flexibility when they decide the price of the products, rather than taking the market price.
[...] Therefore a balance must be met so that both consumers and organizations are happy Demand Demand can be defined as, quantity of a product that consumers will be prepared to buy at a given price over a period of time.” There are three important parts in this definition: Any given consumer must have the ability and will to purchase a product. E.g. everyone wants a huge expensive house but not everyone can afford one. Demand and price are directly linked. [...]
[...] 2.2 Elasticity of demand Elasticity of demand can be defined as, relationship between the proportionate change in price and the proportionate change in quantity demanded.” A numerical value can be provided using the formula below. Price up demand down 25% Demand is elastic Price up demand down Demand is inelastic Price up demand down 10% Unitary elasticity of demand With regards to the UK banking industry demand may increase or decrease due to interest rates and times of the year. [...]
[...] This means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets. Within an oligopoly there may be intense competition, if there isn't then they may collude to operate as virtual monopolies. An example of an oligopoly is BSkyB and OnDigital who operate within the satellite television broadcasting industry. BSkyB, part of News International Corporation, which is run by Rupert Murdoch, had been dominating the industry up until 1998. [...]
[...] Customers can apply for a mortgage any time of the day and receive a decision within two days. This helps customers because they can have their current account, savings accounts etc linked with their mortgage, plus it's all within their bank. They don't have to go to a building society. NatWest now offer a mortgage' which allows buyers who haven't got the required amount of money for the initial deposit to take out a mortgage without a deposit. This responds to demand from customers because house prices are very high at the moment What is meant by competitive advantage? [...]
[...] Banks respond to this by keeping up to date with legislation and ensuring they are not breaking the law Indirect taxation This is a tax placed on the production of a good or service; it is therefore an additional cost for the producer. Examples include hydrocarbon taxes on petrol and diesel, alcohol taxes on alcoholic drinks, tobacco taxes on cigarettes, import duties which are taxes on non EU products, and of course VAT which is an indirect tax ( 17.5 on more or less all products sold in the UK. [...]
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