The Chapter 6 The Good that Competition Does

Consider 6.1

5. Iriving Babbitt, a famous American literary critic, wrote that ‘’ Competition is

necessary to rouse man from his native indolence, without it life loses its zest and
savor.’’ Can you explain in your own words what Babbitt meant? Would there be
much pleasure in life if nobody had to compete for anything?
Iriving Babbitt, refers to the fact that competition makes us the best of everything
because competing requires working, thinking and engineering to win that turns us
into people who reach their goals and fulfill them.

I think that if there is no competition there is no motivation to create yourself, your

family or business then we would become people without motivation

Consider 6.2

1. List five industries in which you, your family, or close friends work, In which ones
occur ? Place these industries in order of competitiveness.
1. My mother had a small business of Smoothies, Granitas and Coffee,
she has the competitiveness in the area in which she is and tries to
compete with the businesses that are nearby to sell more.
2. My neighbor is a seamstress. She has as competition another
seamstress that you are three houses away from her.
3. My grandmother has a pulperia, her competitiveness is competing
with the other pulperias in my neighborhood.
4. My father works in Supermarkets La Colonia, his competitiveness only
focuses on the other supermarkets. His work focuses on low prices
from the Colonia so that people prefer the products of the Colonia.
5. My uncle works at Pepsi, his big competition is Coca Cola. He has to
sell through television ads and social networks that Pepsi is the best
soda in the world.

2. What would happen if a grain buyer were to consistently offer farmers more money
per bushel than was being offered by surrounding buyers? Do you think the grain
buyer would gain by following this economic policy? Explain.
He would notice that their prices are very high, that is why farmers buy their seeds at
a reasonable price, and since no one would buy their seeds because they are
expensive, he would make an evaluation to leave a favorable price.
Chapter 6 Review

Define

1. Industry Is a group of firms that produce similar

products or provide similar services.

2. Perfect Competition A market in which there are many

independent sellers and buyers, all
firms produce a standardized product,
firm have a free access to the market,
and relevant market information is
available to all firms and buyers one of
the four main types of market models

3. Price taker Is a firm that has no real control over

the price it receives for its products.

4. Monopoly Is a market in which there is only one

supplier of a good, no other firms
produce a close substitute for a good,
and entry into the market is blocked,
one of the four main types of market
models.

5. Monopolistic Competition Is a market in which there are a large

number of firms that provide
differentiated products and have free
access to the market, one of the four
main types of market models.

6. Oligopoly Is a market in which there are only a few

firms, products are either differentiated
or virtually the same, and potential
competitors are discouraged from
entering the market by significant entry
barriers, one of the four main types of
market models.

7. Trust A collusion of businesses which join

together to restrict or eliminate
competition.

8. Price Discrimination The practice of selling the same type of

goods at different prices to different
buyers