54) Contestability Flashcards
1
Q
What is profit maximisation?
A
MC = MR
2
Q
What is a contestable market?
A
A market where there is freedom of entry to the industry and where costs of exit are low
3
Q
What is hit and run competition?
A
When firms can enter a market at low cost attracted by high profits and then leave the market at low cost when profits fall
