Chapter Name: Explain the free market system in terms of perfect and imperfect competitive markets
Description:This chapter examines the dynamics of perfect and imperfect competition within the free market system.
Purpuse:To understand how market structures influence business operations and strategies.
Rational:Knowledge of market mechanisms aids in navigating competitive landscapes.
Chapters Topics
An explanation is given of the characteristics of different economic systems.
Describe and compare various economic systems (e.g. capitalism, socialism) and their approach to ownership, production, and pricing.
The role of competition in a free market system is explained with examples from state owned/monopolies and private businesses.
Discuss how competition functions in capitalist markets, including examples from monopolies (e.g. Eskom) vs. private competitors.
Competition is illustrated by the listing varying prices of the same product/service.
Demonstrate price competition through comparative pricing of the same product from different suppliers (e.g. cellphones or groceries).
Reasons for imperfect competitiveness are described with examples thereof.
Explain market imperfections such as monopolies, collusion, or barriers to entry, using real-world examples.
The advantages and disadvantages of competition are explained with examples for the consumer and business.
Outline how competition affects consumers (e.g. lower prices, choice) and businesses (e.g. pressure to innovate or cut costs).
A description is given of the interaction of roleplayers in the economic system.
Describe how key economic roleplayers (government, businesses, consumers, labour) interact within the economic system and influence each other’s decisions.
The conditions for the existence of perfect and imperfect markets are explained in relation to the South African context.
Explain the features of perfect (many buyers/sellers, homogeneous goods) and imperfect markets (barriers to entry, monopolies), using South African examples.