Commerce Commission Case Study

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Section Two The Role of the Commerce Commission The role of the Commerce Commission is to promote competition in the New Zealand economy. Consumers reap maximum benefits from markets that are dynamic and goods and services that are offered at competitive prices. In the case of allocative efficiency, the market uses resources efficiently to produce goods and services that satisfy consumer preferences. The Commerce Commission ensures allocative efficiency by encouraging fair competition and discouraging anti-competitive business practices. In addition, it ensures that no single producer controls market prices. For instance, it prohibits price fixing tactics and abuse of market position by businesses. In so doing, the Commerce Commission ensures …show more content…

A household refers to a collective entity comprising of a group of people living in a common residence whereas a firm is an entity that produces goods and services with the aim of making a profit. An example of a firm is TSB Bank that offers financial products and services to the New Zealand population. TSB Bank and New Zealand households can interact through two different ways. The first interaction is through economic resources such as land, labour, capital and other resources while the second interaction occurs through the flow of money that provides income to households. Households supply TSB Bank with economic resources in exchange of income and the households use the income to purchase TSB Bank financial products and services. The circular flow model enables money and economic resources to move from households to the bank and vice …show more content…

The phases include contraction, trough, expansion and peak. At the moment, the New Zealand economy is at the expansion phase. The expansion phase is characterized by economic growth and expansion as well as positive GDP. In the second quarter of 2015, the New Zealand economy recorded positive growth following the recovery of the agriculture and mining sectors. GDP for the second quarter of 2015 grew by 0.4 per cent (“Economy still growing”, 2015). In addition, household spending increased by 0.9 per cent while business investment increased by 2.2 per cent. On a yearly basis, the GDP grew by 2.5 per cent implying that the New Zealand economy is slowly recovering from recession (Hall, & McDermott,

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