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Just For Fun: I’m Pretty Sure This Is Not How Competitive Markets Work…

July 3rd, 2010 · 1 Comment
Econ 101 · Just For Fun · Markets

…and I’m kind of an expert, so I should know.

So one of the features of a competitive market is that companies can freely enter the market and compete with existing companies. This feature means that if one company is pricing an item higher than it needs to in order to stay in business and make a “normal” profit, another company has an incentive to come in and undercut on price. As such, I think the owner of the shop pictured here missed a memo somewhere:

Tags: Econ 101 · Just For Fun · Markets

1 response so far ↓

  • 1 Allison // Jul 4, 2010 at 1:23 am

    My first thought here is that perhaps this business is buying used items from the public, in which case the sign would make sense.

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