Dynamics of Competition and the Contestable Market (AQA A-Level Economics): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
How did economists traditionally view competition?
How did economists traditionally view competition?
Primarily as price competition
Which is NOT listed as a form of non-price competition firms use in real-world markets?
Which is NOT listed as a form of non-price competition firms use in real-world markets?
Reducing workforce size
What occurs when price is above the break-even level in perfect competition?
What occurs when price is above the break-even level in perfect competition?
Firms earn abnormal profit
At what point should a perfectly competitive firm shut down immediately?
At what point should a perfectly competitive firm shut down immediately?
When price falls below minimum AVC
What is the profit-maximisation rule for firms?
What is the profit-maximisation rule for firms?
Produce where MR = MC
What is the key feature of a contestable market?
What is the key feature of a contestable market?
How easily new firms can enter
What are sunk costs?
What are sunk costs?
Costs that cannot be recovered on exit
When is hit-and-run competition possible?
When is hit-and-run competition possible?
When barriers to exit are low
What does contestable market theory emphasise over actual competition?
What does contestable market theory emphasise over actual competition?
Potential competition
How does the threat of entry affect monopolist pricing in a contestable market?
How does the threat of entry affect monopolist pricing in a contestable market?
Reduces price to earn normal profit