Contestability Flashcards
1
Q
What assumptions do economists make to model monopolies
A
Only one firm in the market
Profit maximisers
High barriers to entry
SNP
2
Q
What are the 4 barriers to entry
A
Legal barriers
Sunk costs
Economies of scale
Brand loyalty
3
Q
Legal barriers examples
A
Patents
Copyrights
Trademarks
4
Q
What are sunk costs
A
Money cant be recovered if a firm leaves the market. This deters firms from entering the market as there is a high cost of failure.
Eg advertising
5
Q
What is a contestable market
A
A market with low barriers to entry and exit
Easy for new firms to enter
