Examples of Competition

Example 1:  The real estate market is excellent and real estate appraisers are making a lot of money.  When this happens, more real estate appraisers will enter the market either by activating an inactive license or by taking a qualifying real estate course to become licensed.  Conversely, when the market slows, many appraisers will drop out of the industry for lack of work.

 

Example 2:  Builders are making 10-12% profit margins selling speculatively built houses.  Demand is so high that prices increase to the point that profit margins increase to 12-15%.  Builders will increase productivity to meet demand and new and inactive builders will enter the market to take advantage of the higher margins.

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