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Competition |
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Competition |
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The economic principle of competition states that when supply is low and demand high:
| • | Excess profits will result |
| • | Excess profits will attract more sellers |
| • | More sellers will increase supply |
| • | Increased supply will reduce profits |
| • | Eventually equilibrium will be reached |
| • | The opposite is also true |
Profits tend to increase competition. The more profitable an enterprise is, the more competition will be created.
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